Brussels will unveil plans by new pan-European powers to tackle money laundering after a series of scandals rocked the region’s banking sector and exposed uneven application across the block.
Valdis Dombrovskis, EU executive vice-president who oversees financial services, told the Financial Times that the committee would start consulting EU members on whether to create a new supervisor to oversee the fight money laundering or rather entrust additional powers to the European Banking Authority.
The committee also wants to introduce sweeping new regulations to tackle divergent enforcement practices within the union that result from the reluctance of some EU capitals to implement anti-money laundering directives over the years.
“If we want to be more efficient, we have to do it at EU level,” Dombrovskis said in a telephone interview. “Sometimes. . . the problems fell between two national authorities and none of the national authorities really took matters into their own hands. “
The proposal to create a new supervisory body, which would carry out on-site inspections and assess the implementation of the legislation, would mark a significant acceleration of Europe’s response to a wave of money laundering scandals.
In 2018, U.S. law enforcement officials discovered institutionalized money laundering at the now-extinct Latvian bank ABLV, largely linked to Russia.
Other setbacks include revelations that 200 billion euros of suspicious transactions have passed through the Estonian branch of Danske Bank. ING was fined 775 million euros for failure to comply with compliance obligations, and Deutsche Bank was trapped in a scheme that illegally moved criminal funds from Russia to the west.
Dombrovskis said the scope of the new regime – including whether it would only affect the banking sector or a wider range of institutions – would be determined in part by the EU decision to create a new body or give at EBA, the EU agency aims to ensure consistent banking regulations.
Strengthening the EBA would reduce the powers of these new powers and likely cause controversy, as the regulator has been criticized for handling previous money laundering cases.
The European Commission and MEPs were exasperated last year when the EBA suspended its own investigation into the Danske Bank scandal despite the preparation of a detailed report on the failings of the supervisors.
The report identified four breaches of EU law in the way the bank was controlled by the Danish and Estonian authorities and made recommendations to the two countries for follow-up action. Instead, the EBA’s supervisory board, the agency’s key decision-making body, voted to close the investigation without adopting any conclusions.
Dombrovskis said the commission will have to address the “weaknesses” in the EBA’s current governance system.
In the past, the committee has complained that national governments diluted the EU’s plans in 2017 to provide EBA with a full-time executive board, in order to guarantee “effective, impartial and decision-making the EU.” The political terrain has now changed, said Dombrovskis.
“We need more effective governance, more effective decision-making mechanisms within the European Banking Authority,” said Dombrovskis. “We know that there have indeed been problematic cases where, for example, the EBA refused to follow up on the Danske Bank scandal, which was one of the biggest money laundering scandals in Europe.”
Brussels also sued national governments for delaying updating EU anti-money laundering legislation: the committee at one point opened formal proceedings against each EU country for failure to transpose the rules into its national statutes.
“The fact that the EU has experienced a series of money laundering scandals in recent years has also heightened the urgency of the problem and, hopefully, also the political will of the Member States to solve the problem,” said Mr. Dombrovskis.
The need to act against money laundering has intensified with the coronavirus crisis. There has been an increase in cybercrime, as well as virtual money laundering, in line with a more general trend related to widespread lockouts that are driving more web activity, said Dombrovskis. “There is more activity online, and it also happens that more criminal activity occurs online.“
Source: https://www.fr24news.com/a/2020/05/brussels-plans-new-anti-money-laundering-authority.html