https://www.gtreview.com/news/europe/aml-rules-could-place-significant-burden-on-banks-itfa-warns/

The treatment of counterparties under proposed European anti-money laundering standards could create a “significant operational burden” for banks, an industry body has said.

The International Trade and Forfaiting Association (ITFA) raised the concerns in its response to the European Anti-Money Laundering Authority’s (AMLA) consultation on draft regulatory technical standards for customer due diligence, risk assessment and sanctions.

ITFA said the draft standards offered generally useful guidance, but it had concerns over the definition of “business relationships” and how this would be applied to counterparties in supply chain finance structures.

It warned that the new rules could require due diligence to be carried out on potentially “millions” of non-client counterparties across Europe.

In the draft, business relationships are defined as a “business, professional or commercial relationship connected with the professional activities of an obliged entity, which is set up between an obliged entity and a customer”.

Yet ITFA argued that these relationships can vary widely and that obliged entities could work with external parties that “may not fully qualify as customers”.

These include beneficiaries of letters of credit or guarantees, warehouses holding pledged inventory, and sellers or buyers in supply chain finance structures.

Because of this, extra criteria should be included for cases where parties “should not automatically be subject to full customer due diligence requirements”, ITFA said.

It added that non-customer relationships should include minimum checks such as sanctions screening.

Christian Hausherr, chair of the Global Supply Chain Finance Forum (GSCFF) and penholder of ITFA’s consultation, told GTR that the GSCFF “fully supports” the AMLA’s intention to bring in controls for business relationships.

But, Hausherr said, the organisation is advocating for greater recognition of the nuances of business relationships within the standards, as outlined in the Wolfsberg Trade Finance Principles – a set of non-legally binding AML principles accepted as best practice in the industry.

These principles address supply chain finance in particular and explain “why a counterparty should not be treated in the same manner as a fully adopted customer”, Hausherr noted.

The current draft standards “would potentially force banks executing reverse factoring programmes to apply customer due diligence measures for these counterparties that are not typical clients of these banks and do not even fall into the client scope of the respective business division of the banks”, Hausherr said.

The AMLA launched the consultation in February this year with the intention of harmonising AML rules across the EU.

The standards will be developed over the course of 2026, with the AML regulations and the sixth AML directive coming into force for member states in July 2027.

ITFA said it encouraged all members to review the submission and consider responding. The consultation deadline is May 8, 2026.