EBA Issue Report on Virtual IBANs

31th May 2024

The FIAU would like to inform subject persons that the European Banking Authority (EBA) has issued a report on the issuing and use of what is commonly referred to as virtual IBANs (vIBANs). 

The Report summarises the EBA’s observations and findings from the fact-finding exercise it carried out between 2023 and 2024. Based on the six most common cases of vIBAN use in the EU, the report focuses on the risks and challenges that vIBANs may present to consumers, financial institutions, national competent authorities, and the strength and robustness of the EU financial system. 

This publication acknowledges that currently there is no legal definition of vIBANs at EU level, and the report sets out some common characteristics of vIBANs that have been observed with reference to the cases of vIBAN use. These include that vIBANs have the same functionality and format as standard IBANs, which makes it impossible for third parties to distinguish them from standard IBANs. However,  vIBANs are connected to a payment account, known as a master account that has its own IBAN, which is different from a vIBAN. 

Based on the analysis carried out by the EBA, 12 risks and challenges associated with vIBANs were identified. Some examples include:

  • Issues arising from different interpretations of the relevant legislations by national competent authorities in different Member States.
  • The risks of ML and FT due to different interpretations of the AML/CFT framework in the context of the cross-border service of vIBANs.  This results in risks of lacunae in AML/CFT supervision and unclear interpretation of the reporting requirements to the financial intelligence unit (FIU). It could also lead to challenges linked to the tracing of suspicious transactions in relation to vIBANs by the FIUs and law enforcement. 

Additionally, this Report offers some suggestions about the actions that could be undertaken by PSPs, co-legislators and national competent authorities to mitigate the risks identified in the report, including risks of ML/FT. 

One can access this publication on the FIAU’s website by clicking here where you will find the document under the tab entitled ‘EBA’ within the reports section, or through the EBA’s website directly

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