As anti-money laundering reform kicks in, EU seeks to close new gaps
10 Jul 2018

New rules to tackle money laundering in the European Union took effect on Monday but the bloc already faces calls for further reforms as new shortcomings emerged after alleged wrongdoing at banks in Baltic states and Malta.

The fifth review of the EU anti-money laundering directive became binding on Monday after two years of EU talks to strengthen controls on the real owners of companies and digital payments, including virtual currencies.

But despite marking progress in the fight against large-scale fraudsters, the new rules could be born obsolete as they fail to address new gaps exposed by a series of banking scandals this year in Latvia, Estonia and Malta.

The adopted overhaul requires states to set up centralised bank account registers to smooth the work of security forces.

But the national “financial intelligence units” remain weak and rarely cooperate, making it easier for criminals to get away with illegal proceeds when they transfer them across borders.

A common supervision could be more effective.

“The Commission cannot hesitate any longer in bringing forward a legislative proposal for a European anti-money laundering authority,” EU lawmaker Sven Giegold said on Monday.

His call echoes demands from the European Central Bank’s top supervisor, Daniele Nouy, who has said EU rules do not give supervisors clear powers to pull banking licences over alleged money laundering, or force the removal of bank board members if they do not pass a so-called “fit and proper” assessment.

The European Parliament has asked the ECB to step up its anti-money laundering checks under current rules before new reforms can be adopted.

The European Commission, which is in charge of proposing EU legislation, has responded to the growing pressure by setting up a group of banking watchdogs that is expected to improve “practical coordination of anti-money laundering supervision”.

– By Francesco Guarascio, Reuters, 9 July 2018

Link to Reuters.

Advance your CPD minutes for reading this article, by signing up and using the CPD Wallet

Must Read

Understanding EU anti-money laundering law: EU 4AMLD, EU 5AMLD, EU 6AMLD

In recent years the European Union has looked to flex its legislative muscle and come up with an array of laws aimed at cracking down on money laundering and terrorism financing. Key to its package are its various directives, which impact national laws, banking operations and other industries across… Read More

Banking: Curbing employee fraud and corruption with an effective KYE program

The banking system’s vulnerability to fraud, corruption and money laundering is once again a focal point of debate in the wake of recent disclosures by the Central Bank of Nigeria that major losses have been recorded by banks from armed robbery cases and other criminal activities amounting to N12bn… Read More