Security & Fraud

EU Watchdog Calls For Money Laundering Reform

The European Banking Authority is facing calls from the financial regulation head in Europe to improve its money laundering safeguards after opting not to pursue an investigation into the Danske Bank money laundering scandal.

According to a report in The Financial Times, the European Banking Authority has been facing criticism ever since it voted not to pursue an investigation into Danske Bank without any findings. The draft report that the European Banking Authority voted to reject pointed to four breaches of EU law in how Danske Bank was supervised by Danish and Estonian authorities. It made recommendations for follow-up action for both countries, reported the paper. The European Banking Authority decided against the report and voted to close the investigation. That didn’t sit well with some regulators, with Valdis Dombrovskis, vice-president of the European Commission responsible for financial services policy, telling The Financial Times that it was disappointing the EBA didn’t act on one of the largest money laundering scandals to rock Europe.  He called for legislation that would change how that agency makes decisions.

Meanwhile, Sven Giegold, a German green MEP who has called for tougher oversight of money laundering, told The Financial Times it was “scandalous” that the EBA chose to reject the recommendations in the report. “The national supervisors disregarded their legal obligation to act only in the European interest,” he told the paper. He called on the EU commission to go after Denmark and Estonia for not following EU laws.  The 45-page report found breaches of the EU laws including “significant shortcomings” when it comes to cooperation between supervisors in Denmark and Estonia, reported the FT. It also found ineffective monitoring to ensure due diligence practices were followed and lackluster reviews of governance arrangements at Danske Bank, reported the FT. The report was prepared by staff and a panel of senior supervisors at the EBA.

 

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