Regulation

EU Ups Bank Supervision To Stem Money Laundering

European Union governments have reached a preliminary deal to bolster bank supervision in the hopes of preventing money laundering.

According to Reuters, the deal, which could be finalized before December, confirms previous proposals made by the European Commission to give more powers to the European Banking Authority (EBA). Yet it doesn’t address loopholes regarding the discretion states will have on imposing sanctions or the creation of a dedicated agency to fight money laundering.

Instead, EU states have made a preliminary deal to give the EBA new powers to enforce the investigation of suspected breaches of anti-money-laundering rules. And when national supervisors do not act within deadlines, EBA could force a bank “to take all necessary action to comply with its obligations.”

The move comes after a series of money-laundering scandals in the EU that forced regulators into action. One of the biggest involves Danske Bank, Denmark’s largest bank, which is being investigated over what has been termed “massive money laundering flows” from Russia and several former Soviet states. The agencies probing the alleged incident include the Securities and Exchange Commission (SEC), the Department of the Treasury and the DOJ. The probes are ongoing, and relate to transactions tied to the bank’s Estonian branch — and focus on $150 million that made its way through accounts of non-Estonian holders.

The EU has been looking for ways to make money laundering more difficult, including providing guidelines to EU states for handling national schemes to sell passports and residency permits to wealthy foreigners. In fact, it was reported that in 13 EU countries — Austria, Cyprus, Luxembourg, Malta, Greece, Latvia, Portugal, Spain, Ireland, Britain, Bulgaria, the Netherlands and France — there are government schemes in which wealthy people can get citizenship or residence rights in return for large investments.

“Money must not be the criterion for citizens’ and residents’ rights in the EU,” said EU lawmaker Sven Giegold. “The trade in passports and visas by EU states must be stopped as soon as possible. These programs are a gateway to criminal money,” he added.

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