Security & Fraud

EC Eyes Greater Enforcement Over Money Laundering

Due diligence

The European Commission is crafting a proposal aimed at giving the European Banking Authority more enforcement powers and resources to go after banks that are involved in criminal financing.

The Financial Times reported that in another plan the European Commission wants the European Public Prosecutor's Office to have the power to initiate investigations into the financing of terrorism in member states. Both ideas, noted the Financial Times, are expected to be finalized and highlighted in European Commission president Jean-Claude Juncker's annual “State of the Union” speech this week. The plans will also be formally announced the week after his speech, noted the report. The aim is to increase European Union anti-money laundering powers after news broke that $30 billion of Russian and former Soviet Bloc country money was laundered through Danske Bank’s Estonia branch in one year alone, reported the Financial Times. It noted that ING, the Dutch Bank, also had to pay penalties in September for not enforcing anti-money laundering rules.

As it stands, while lots of the biggest European Union banks are supervised by the European Central Bank, the anti-money laundering rule enforcement isn't covered by that — making sure the banks are following the AML laws falls on national government agencies. But with the scandals, the European Commission has increased focus on enforcement. One EU official told the paper the move to give the EBA more oversight of anti-money laundering was due to frustration over how long it took for a national watchdog to launch an investigation into how authorities in Malta handled Pilatus Bank, the lender in Malta that prosecutors in the U.S. contend was created to use criminal proceeds to get around Iran sanctions.  “I think we need a single EU-wide agency to ensure tough, effective and consistent enforcement,” Bruno Le Maire, France’s finance minister, told the Financial Times in the report. “We will be looking into that idea very closely.” Meanwhile, Rasmus Jarlov, Denmark’s business minister, told the paper his government is aiming to put on the books some of the toughest AML rules in the wake of the Danske scandal. “We must draw lessons from it,” he said in the report. “It would certainly make sense to have a discussion about the whole set-up in the EU.”




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