Materiality of a weakness
Article 3
1. Reporting authorities shall consider a weakness to be material where that weakness reveals, or could lead to, significant failures in the compliance of the financial sector operator, or of the group to which the financial sector operator belongs, with any of the AML/CFT-related requirements. 2. For the purposes of paragraph 1, reporting authorities shall assess at least all of the following criteria: (a) whether the weakness is occurring or has occurred repeatedly; (b) whether the weakness has persisted over a significant period of time (duration); (c) whether the weakness is serious or egregious (gravity); (d) whether the management body, or the senior management, of the financial sector operator appear to know about the weakness and decided not to remedy it (negligence), or whether they adopted decisions or held deliberations directed at generating the weakness (wilful misconduct); (e) whether the weakness increases the exposure of the financial sector operator, or of the group to which it belongs, to money laundering or terrorist financing risks; (f) whether the weakness has, or could have, a significant impact on the integrity, transparency and security of the financial system of a Member State or of the Union as a whole, or on the financial stability of a Member State or of the Union as a whole; (g) whether the weakness has, or could have, a significant impact on the viability of the financial sector operator or of the group to which the financial sector operator belongs; (h) whether the weakness has, or could have, a significant impact on the orderly functioning of financial markets.