The money laundering scandals of recent years in the European Union have shown that the banking sector in the European Union in particular remains extremely vulnerable to cross-border money laundering. Some late scandals like the #wirecard scandal in Germany as well as the #Kobenhavn Andelskasse scandal or the Danske Bank scandal in Denmark made the heavy flaws in the supervisory system and its implementation in the Member States evident.

As of 7 May 2020, the European Commission, Executiwithve Vice-President Valdis Dombrovskis, published a new European Union Action Plan for the prevention of money laundering and terrorist financing. This action plan lists measures that the Commission intends to undertake during the next 12 months to better harmonize, enforce, monitor and coordinate EU rules against money laundering and terrorist financing.
The aim of the plan is to close existing loopholes in the anti-money laundering regime and to eliminate weaknesses in EU rules.

The action plan consists of the following elements:

  • More effective implementation of EU rules in the Member States: Monitoring by the EU Commission (including the initiation of infringement proceedings)
  • Uniform set of rules: greater harmonisation of money laundering rules to avoid national regulatory discrepancies (replacement of the money laundering directives by EU regulations)
  • Supranational supervision, either by the European Banking Authority (EBA) or a new institution to be created at EU level
  • New coordination and support mechanism for national financial intelligence units (FIUs) in the European Union
  • Enforcement of criminal law and exchange of information at the EU level: Judicial and law enforcement cooperation on the basis of EU instruments and institutional arrangements is crucial for an adequate exchange of information. According to the EU Money Laundering Directive, the private sector must support the fight against money laundering and terrorist financing. The Commission intends to issue guidelines on the role of public-private partnerships to clarify and improve data exchange
  • Global role of the EU: actively participating in and promoting global anti-money laundering measures, in particular through the FATF

While most elements of the Action Plan, such as the future cooperation of FIUs, remaining still extremely vague, the Action Plan provides for two concrete steps.

  • the replacement of the EU Money Laundering Directive, which has already been revised five times since 1990, by an EU- regulation.

While EU directives must be implemented by means of a national law before they are binding on the obligated institutions and companies, an EU regulation has direct effect and validity. Moreover, a directive only defines a minimum standard for the obligations regulated therein. EU regulations do have one big advantage: the legal acts can enter into force more quickly in a one-step procedure. And as the economy changes swiflty right now an EU-regulations would allow a much faster response to new risks and entry points for money laundering in the financial system throughout Europe.

  • the creation of a European supervisory authority with direct powers in relation to the competent supervisory authorities in the EU states or additional auditing rights for obligated institutions and companies, which may be exercised independently or together with the national supervisory authorities.

For us the creation of such a European supervisory authority with direct powers is the most important step to undertake. At present, the Member States alone are responsible for monitoring the application of the relevant EU anti-money laundering provisions at national level, which results in differences in the density and quality of financial supervision, This approach definitely does not work.

In the Action Plan, the Commission has proposed two ways to install this supervisory authority: an EU supervisory authority either through the European Banking Authority (EBA) or through the creation of a specific EU authority.

With the EBA board being composed of representatives of the national supervisory authorities, the EBA more or less reflects the non-performance of the national supervisory authorities so far a new unit would be much more recommendable.

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