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Governments must work more closely together to address financial crime, fostering collaboration between dedicated national units and aligning regulatory frameworks, the European Commission’s leading financial crime official said yesterday.

Raluca Pruna, head of the financial crime unit in the EC’s Directorate-General for Justice and Consumers, told the European Banking Summit in Brussels that Financial Intelligence Units (FIUs) – national agencies that track suspicious financial activity – should improve partnership working. “It is important to improve communication between FIUs in different [EU] member states,” she said.

Pruna argued that national governments should also act to harmonise their anti-money laundering (AML) work. Noting that the EC passed an AML directive last year and in July called for stronger collaboration on AML, she commented: “There are many calls lately for more harmonisation – we have a fragmented environment at Union level. The regulatory framework that we have does not stand still. The European Parliament itself is calling for more harmonisation. I am pretty certain this will be achieved.”

Philippe de Koster, president of the Belgian Financial Intelligence Processing Unit (CTIF-CFI), noted that the Egmont Group of FIUs – a network of 164 such bodies – and the EU’s network have improved data-sharing, enabling “quick reactions”.

“I can get information within minutes or hours – or maximum one week,” he said. But there’s still a need for improvements in how information is acted upon, he added: “It is clear processes [related to AML information-sharing] need to be improved. We are overwhelmed with information. I don’t need an intelligent database – I need an intelligently-managed database.”

“Sometimes I wonder if the European Commission understands perfectly how an FIU is supposed to be working. I have worked in the European Commission, and from theory to practice there might be quite a gap.”

Mounting global problem

Financial crime is a mounting global problem, with less than one per cent of proceeds seized or frozen by law enforcement, according to estimates. The European Commission this July adopted a communication and four reports to support European and national authorities on AML and terrorist financing risks. The Commission at the time acknowledged that “a number of structural shortcomings in the implementation of the Union’s anti-money laundering and counter terrorist financing rules still need to be addressed”. Problems that were flagged included regulatory and supervisory fragmentation.

Pruna described the EU’s numerous AML measures to date as “a big package” and “a priority” for the institution. She described how the Commission had identified 47 products and services – including professional football – as “potentially vulnerable to money laundering or terrorist financing risks” – a number that has risen from 40 in 2017.

She went on to acknowledge that AML is a moving target and the “pieces of the puzzle are not yet complete”.

Know your customer

A related strand of discussion on AML focused on ‘know your customer’ (KYC) rules: the process of a business verifying the identity of its clients and assessing the chances of their operating criminally. Pruna said that a European Commission-established expert group, including private-sector representatives, is compiling a report that is due to be completed by the end of this year. Experts within member states are currently being consulted for the dossier. She said the Commission will “look at the recommendations and fine-tune policy if need be”.

Roger Kaiser, senior policer adviser at the European Banking Federation – which organised the conference – said: “We see KYC requirements as a priority for harmonisation, even at a global level.”

Another theme that emerged during successive speaker sessions on the conference’s opening day was the challenge in reconciling different countries and agencies’ approach to data protection with the direction of travel towards greater transparency and data-sharing working its way through the international banking system, particularly in the wake of the EU’s General Data Protection Regulation (GDPR). One of the speakers, Che Sidanius of financial markets data provider Refinitv, referred to “tension” between AML and data privacy rules.

A version of this article first appeared on our sister publication Global Government Forum


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