EU admits anti-money laundering rules inefficient, prepares for improved supervision

Deutsche Bank and HSBC have been hit by fines for laundering money of illegal businesses and Russia. [Bjorn Laczay/Flickr]

As recent scandals proved that new anti-money laundering rules fall short of monitoring financial flows, the EU is leaning towards stepping up the supervision and enforcement of its legislation.

The last revision of the anti-money laundering framework (V Directive) entered into force last July. These rules saw the light of day while a large group of member states were in the European Commission’s crosshairs because they had failed to fully implement the previous directive.

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But various high profile cases across Europe have shown that the new directive was also too modest to monitor the financial circuit even before its ink was dry.

The Commission launched a working group last May to improve the cooperation between authorities in this field and its conclusion was clear: the supervision and enforcement of the rules needs to be strengthened.

The working group also included representatives of the ECB and the European Supervisory Authorities (ESAs)

Its ‘reflection paper’ noted that despite the role the ESAs should play, “tight resources coupled with a lack of appropriate powers have an impact on the ESAs’ ability to take on a more substantial role” in the anti-money laundering field.

The report, sent to member states and the European Parliament for consultation this week, outlines various scenarios.

While some recommendations call for clarifying existing rules or common guidance on how to factor in anti-money laundering aspects into supervision, the paper also calls for giving more powers to the ECB.

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Most of the actions included in the report, published on the blog of MEP Sven Giegold (Greens/EFA), are postponed to the second next year.

But EU watchdogs are signalling that some of the recommendations could be taken on board sooner than that.

Despite the exchange of information that has been facilitated among national competent authorities, Financial Intelligent Units and the ECB itself under the V Directive, the EU executive notes that there is room for “better cooperation”, one EU official said.

Following the consultation with the Parliament and member states, a Commission spokesperson said that the institution will assess “possible next steps to enhance the cooperation between the prudential and the Anti-Money Laundering supervisors in the EU”.

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For Giegold, the scandals affecting banks in Malta, Latvia, Estonia, the Netherlands, Germany and Denmark “reveal the failure of the national anti-money laundering authorities”. He laments that the new directive do not foresee that the Commission could enforce the rules directly.

“To combat money laundering effectively, Europe needs a European anti-money laundering authority,” the German MEP wrote in his blog.

EU to check on money laundering moves in Malta, journalist's murder

The European Union’s justice commissioner said on Monday (23 April)  she will visit Malta in the coming weeks to look at its anti-money laundering moves and check on how an investigation is going into the murder of an investigative journalist.

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