Business World

Wednesday 14 November 2018

EU urges centralised structure to tackle money laundering

‘Anti-money laundering supervision has failed all too often in the EU,’ said Valdis Dombrovskis, the commissioner in charge of financial services policy. Photo: Bloomberg
‘Anti-money laundering supervision has failed all too often in the EU,’ said Valdis Dombrovskis, the commissioner in charge of financial services policy. Photo: Bloomberg

Stephanie Bodoni and Alexander Weber

The EU plans to hand more powers to its top banking regulator after high-profile money-laundering cases involving some of the region's biggest lenders.

The European Commission yesterday proposed to empower the European Banking Authority (EBA) to address weaknesses in the bloc's defences against illicit financial flows. The EBA would ensure greater co-operation between banking supervisors and be able to request national investigations, the plan stated.

"Anti-money laundering supervision has failed all too often in the EU," Valdis Dombrovskis, the commissioner in charge of financial services policy, said.

"Today we are enabling the EBA to make sure that different supervisors co-operate and exchange information and that anti-money laundering rules are enforced effectively across EU countries."

The move comes after ING agreed to pay about €775m to settle a Dutch investigation into corrupt practices by a former client, a scandal that led to the resignation of the bank's chief financial officer on Tuesday. Denmark's Danske Bank is meanwhile facing criminal investigations after its Estonian operations were allegedly used to launder as much as €7.75bn.

"Recent cases in the banking sector showed that they are not always supervised and enforced with the same high standards everywhere across the EU," Justice Commissioner Vera Jourova said. "In times where money moves across borders at the click of a mouse, we must ensure supervision that is proactive and fast."

A report by the EU's financial regulators, the European Central Bank (ECB), and officials in Brussels seen by Bloomberg identified a range of shortcomings in defences against money laundering. The August 31 document highlighted a lack of co-operation between authorities and imprecise regulations. The ECB has led the call to better coordinated efforts. It supports "any initiative that could lead to a more harmonised and more coordinated approach to anti-money laundering," ECB executive board member Benoit Coeure said. "This could be a single agency."

Officials are torn over the best approach to address the current weaknesses. The new proposal will feed into an ongoing review of the EU's supervisory architecture that's run into stiff opposition from national governments, wary of handing more powers to central authorities.

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