European Banking Authority (EBA)

KEY POINTS

Consistent application of EU law

The EBA:

• draws up regulatory technical standards to specify the banking legislation to be adopted by the European Commission, where the European Parliament and the Council of the European Union delegate this power to the Commission;
• has the power to issue guidelines and recommendations on the application of the relevant EU legislation; Amending Regulation (EU) 2019/2175 had temporarily expanded these powers in the field of anti-money laundering and countering the financing of terrorism (AML/CFT), but Regulation (EU) 2024/1620 (see summary) subsequently transferred these responsibilities to the new Anti-Money Laundering Authority (AMLA).

Stress tests

The EBA has a prominent role in the EU-wide stress test exercise that examines banks’ resilience with regard to adverse market developments and any systemic risks in the EU financial system:

• it initiates and coordinates stress tests in the EU with the national authorities responsible for supervising banks;
• in cooperation with the European Systemic Risk Board (ESRB), the European Central Bank and the Commission, the EBA defines a common methodology for each edition of the stress test;
• it also monitors and assesses market and credit trends.

Breaches of EU law

• The EBA has the power to investigate the alleged incorrect application of EU banking and financial legislation by a national supervisor (in particular when it fails to ensure that a bank complies with the requirements laid down in that legislation).
• The EBA may address a recommendation to the relevant national supervisor. If the supervisor does not comply with this, the Commission can issue a formal opinion taking into account the EBA’s recommendation.
• If a national supervisor persists in not complying with the law, the EBA can adopt decisions directly addressed to the bank. This power can only be used in exceptional circumstances.
• Regulation (EU) 2024/1620 assigns responsibility for immediate action in cases of breaches of AML/CFT EU law to AMLA, making the EBA’s former direct intervention powers in this field obsolete.

European financial supervision

The EBA is part of the European System of Financial Supervision created in 2010, which, in addition to the ESRB, comprises two other supervisory organisations:

• the European Insurance and Occupational Pensions Authority,
• the European Securities and Markets Authority.

Amending Regulation (EU) 2019/2175 bolsters the mandates, governance and funding of the three European supervisory authorities and, in regard to the EBA:

• strengthens its powers in the area of consumer protection by promoting greater transparency and clarity regarding financial products and services by:
  • monitoring trends in retail financial products’ costs and charges,
  • developing retail risk indicators for consumers;
• increases its resources to enable it to carry out its new tasks.

Regulation (EU) 2024/1620 transfers the AML/CFT tasks (including the collection of information from national authorities, the development of supervisory standards, the carrying out of risk assessments and international cooperation on cross-border cases) to AMLA. The EBA now retains its role in consumer protection and prudential supervision but no longer has overall EU responsibility for AML/CFT.

Anti-money laundering / counter-terrorist financing central database

EBA manages a central EU database on money laundering and terrorist financing weaknesses, as required by Article 9a of Regulation (EU) No 1093/2010 and detailed in Commission Delegated Regulation (EU) 2024/595:

• it records material weaknesses in financial sector operators’ compliance with AML/CFT rules, based on criteria such as gravity, repetition or impact on stability;
• national authorities (prudential, AML/CFT, conduct, resolution, deposit guarantee schemes), the European Central Bank and the Single Resolution Board must report information on operators, weaknesses and corrective measures without undue delay;
• the EBA analyses and shares this information confidentially with the competent authorities, in cooperation with the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority, under strict secrecy and EU data protection rules;
• reports are submitted in English, with summaries if supporting documents are in other languages.

This tool strengthens early detection of risks and ensures consistent monitoring across the EU.

Payment services

In relation to payments services in the EU, amending Directive (EU) 2015/2366 strengthens the EBA’s role (see summary) and requires it to:

• develop a publicly accessible central register of authorised payment institutions, which must be kept up to date by the national authorities;
• assist in resolving disputes between national authorities;
• develop and issue guidelines and draft regulatory technical standards on:
  • strong customer authentication and secure communication channels with which all payment service providers must comply,
  • cooperation and the exchange of information between supervisory authorities.

Headquarters

Under amending Regulation (EU) 2018/1717, in the context of the United Kingdom’s withdrawal from the EU, the headquarters of the EBA was relocated from London to Paris as of 30 March 2019.