August 4, 2021

The European Union will beef up its arsenal in the fight against money laundering

It was one scandal too many. In 2019, the supervisory office of the European Banking Authority decided to close the investigation into possible violations of European law on money laundering. A classification without continuation, while 200 billion euros of doubtful money had passed through the Estonian subsidiary of a Danish bank.

Two years later, the European Commission proposed major changes in its legislative arsenal in the fight against money laundering and the financing of terrorism. “We have assessed the flaws in our legislative system and we say ‘Enough is enough!’ “exclaimed Mairead McGuinness, European Commissioner for Financial Services, at a press conference in Brussels on Tuesday, July 20.

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Central piece of this new architecture: the creation of an anti-money laundering authority, which will employ around 250 European officials. “The control landscape is fragmented country by country. National agencies do not talk to each other. This European authority is essential ”, says Nicolas Véron, member of the European think tank Bruegel and the Peterson Institute in Washington.

The task of the authority will be to create a “Single integrated monitoring system”. However, its attributions will not be confined to the coordination of the national supervisory authorities. It will directly supervise certain banks or financial institutions – those which will be considered to have the highest profile of money laundering risk. “At the national level, supervision is not always optimal”, notes a European official.

“Huge delays in processing files”

It will also work in conjunction with the national financial intelligence units, which in a way represent the money laundering police. They decipher suspicious transactions and transfer them to the prosecution. Karel Lannoo, of the CEPS think tank, believes that “It is especially at this level that we should act”. “These cells have means that vary considerably from state to state. There are enormous delays in processing files. The Commission wants to create a new agency without tackling the root of the problem, which concerns police and judicial cooperation. “

In addition, Brussels wishes to amend the existing legislation. It will be included in a European regulation and no longer a directive. Change is anything but cosmetic. While the directives leave a wide margin of appreciation to the Member States in their transposition into national law, the regulations are directly applicable throughout the European Union.

National bank account registers will be connected and accessible to law enforcement agencies

This regulation should make it possible to harmonize the due diligence duties of financial institutions with regard to their customers as well as provisions relating to the beneficial owners of transactions. National bank account registers will be connected and accessible to law enforcement agencies. Cash payments for an amount over 10,000 euros will be prohibited. Finally, this regulation will apply to services that offer cryptocurrency.

The first reactions from the European Parliament were rather favorable to this round of proposals. This legislative “package” will be on the table of MEPs and Member States in the coming months. The new authority should be fully functional in 2026.