EU plans joint money-laundering cop after years of bank scandals
The European Union is taking another small step toward setting up a common authority to fight money laundering in the bloc, after a string of revelations over the last two years exposed fundamental flaws of its framework.
The European Commission, the EU's executive arm, will formally propose the creation of such an institution early next year, it said on Thursday. More analysis is needed to determine the exact role of this body, what kind of companies it should oversee and whether an agency needs to be created from scratch, it said.
The debate over how to reform the EU's defense against money laundering has been raging ever since U.S. authorities exposed wrongdoing at a small Latvian lender in 2018. Further scandals have come to light since then, involving major European banks including Danske Bank A/S, Swedbank AB and ING Group NV.
A major criticism of the EU's framework has been that it's fragmented along national lines, leaving loopholes that are easily exploited by criminals. Countries have also been slow to implement European anti-money-laundering regulations, leading to a patchwork of rules and compounding the problem.
"There should be no weak links in our rules and their implementation," Valdis Dombrovskis, the EU commissioner in charge of financial-services policy, said in a statement. He promised to deliver all actions presented on Thursday over the next 12 months.
The commission also unveiled a new list of foreign countries posing higher risk to companies dealing with clients there. An earlier version that featured Saudi Arabia and four U.S. territories was rejected by EU countries last year. The new list doesn't include these jurisdictions and is closely aligned with one drawn up by the Financial Action Task Force, a global body, the commission said.
The coronavirus crisis has underscored the challenge for the EU's financial system. The FATF has warned that criminals and terrorists could seek to exploit "gaps and weaknesses" in national anti-money laundering systems as resources are focused elsewhere. EU authorities have said that fraudulent activities are on the rise.