Despite New EU AML Laws, Banking Scandals Persist

Although new rules to combat money laundering in the European Union took effect this week, there are already calls for more reforms after a series of banking scandals in Latvia, Estonia and Malta. According to Reuters, this fifth review of the EU anti-money laundering directive became mandatory on Monday (July 9), increasing controls on the owners of companies and digital payments, including virtual currencies.

But these new rules don’t factor in the gaps exposed by the alleged misconduct at financial institutions (FIs) in the Baltic states and Malta. In addition, they fail to address the constant changes in cryptocurrencies, and were drafted when Europe accounted for only a small share of bitcoin and other crypto trading. In addition, while the new regulations require states to set up centralized bank account registers to make work easier for security forces, these units are seen as weak and rarely cooperate with one another, making it easier for criminals to get away with money laundering activity.

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

The European Central Bank’s (ECB) chief supervisor, Danièle Nouy, agreed, noting that EU rules do not give supervisors enough authority to pull banking licenses over alleged money laundering or enforce the removal of bank board members if they fail to carry out a proper assessment. The European Parliament has asked the ECB to boost its current AML checks before new reforms can be adopted.

New ideas are expected by the end of the year, but EU member states still have another 18 months to implement changes at national level and many could take much longer. In fact, two-thirds of the EU governments have not yet applied the fourth review of anti-money laundering rules, which went into effect in 2015.


New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.