EBA issues Guidelines on loan origination and monitoring taking into account AML and ESG considerations
The European Banking Authority (EBA) published May 29th its Guidelines on loan origination and monitoring, that require institutions to develop robust and prudent standards in order to ensure the proper assessment of the newly originated loans.
These guidelines will start applying from June 30th 2021, but institutions will benefit from a couple of transitional arrangements:
- The application of the guidelines to the existing loans and advances that required either a renegotiation or a contractual change with the borrower, will apply starting June 30th 2022;
- Institutions will be permitted to address any data gaps and adjust their monitoring framework and infrastructure until June 30th 2024.
This article provides further insight on the interaction between prudential and consumer protection frameworks and the proportionality principle.