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The European Commission is to undertake a “thorough assessment” of the European Union’s anti-money laundering (AML) strategy after EU finance ministers called for the creation of a new central supervisory body.

Finance ministers from six EU member states – Germany, France, Italy, Spain, the Netherlands and Latvia – put forward a joint position paper proposing a new EU ‘supervisory function’ and harmonised European regulatory framework to combat money-laundering and terrorist financing.

Commission executive vice-president Valdis Dombrovskis said after a meeting of EU finance ministers on 5 December: “Today we discussed tackling money laundering and terrorist financing. The situation is serious: recently we had a number of money laundering scandals across the EU. We are eager to make quick headway. We’ve done a lot of groundwork to prepare for proposals next year. Our laws have to be implemented, and supervised efficiently. In this context, we will consider the options for conferring certain supervisory powers to an EU body.”

Asked about likely next steps, a Commission spokesperson told Global Government Forum that they could not “pre-empt at this stage” but that they would “follow up as appropriate, after a thorough assessment”.

Cross-border issues

As the six countries’ four-page position paper points out, money-laundering and terror financing are often cross-border issues. But, at present, supervision is largely led at a national level within the 28-country bloc.

There is potential for an entirely new agency tasked with overseeing AML measures across the EU to be formed, or for the European Banking Authority (EBA) to become a central AML body. Nicolas Véron, a senior fellow at Brussels think-tank Bruegel, and illicit finance expert Joshua Kirschenbaum wrote that the former is the “more likely” option in a joint-blog post published by Bruegel.  

In an interview on 5 December, EBA chairperson Jose Manuel Campa told European media network Euractiv that an AML authority would “need to have a clear mandate and resources”.  

“It is very difficult to have a mandate if the regulation under which you are operating is very diverse across the EU,” Campa said. “I don’t think that it is really a choice of one versus the other, regulation versus authority. You need progress in both directions. Having just an anti-money laundering authority at a European level without a change in the existing regulation probably would not really make it operative. You need to make adjustments in regulation as well.”

Asked for a comment by Global Government Forum, a spokesperson told us: “The EBA believes that a single AML supervisor would go further in helping to address issues around divergent supervisory approaches, inconsistent outcomes and intermittent cooperation. A single EU supervisor could take a single market view on key risks and strategy and would also create a single point of contact for key stakeholders involved in fighting financial crime. The decision on what form the AML supervisor should take is ultimately a political one, but the EBA’s significant policy expertise in AML/combating the financing of terrorism, and a solid track record in setting up and managing large amounts of data would be an asset to the new body.”

In their latest blog-post on the topic, Véron – who is also senior fellow at the Peterson Institute for International Economics in Washington DC – and Kirschenbaum write that both the establishment of a European central supervisor and further harmonisation of the AML regulatory framework “will not be a panacea”. They added that “later endeavours could include more co-ordination of the Financial Intelligence Units (FIUs)” – the national agencies that track suspicious financial activity – “at EU level”.  

Financial Intelligence Units in the spotlight

Raluca Pruna, head of the financial crime unit in the Commission’s Directorate-General for Justice and Consumers, said at a Brussels conference six weeks ago that FIUs should improve partnership working. “It is important to improve communication between FIUs in different [EU] member states,” Pruna told the European Banking Summit.

Véron told Global Government Forum this week: “I concur that more co-ordination of FIUs would be useful, but I don’t think it is as urgent a task as is the centralisation of AML supervision. From what I can observe, the problems that have been observed in the last two years have been about AML supervisory failures more than they have been about lack of co-ordination among FIUs. Also, and related to this theme, a central AML authority for the EU is a significantly easier and more straightforward reform than would be the creation of a single FIU.”

Asked by GGF for his view on how well the EU is equipped to tackle money laundering, relative to other parts of the world, Véron said: “I believe the EU is currently less well equipped than the US for the fight against money laundering, even though on some aspects its legislation is more demanding.”

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


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