The increased dissatisfaction with the European Banking Authority's (EBA) performance as the anti money laundering (AML) supervisor of banks' national AML supervisors has gained momentum in light of recent money laundering scandals (namely that of Danske Bank). Such discontentment has led to calls by the bloc's finance ministers for an "alternative" pan-EU "independent" authority with an explicit AML supervisory mandate and a "firm" approach to enforcement.
On 8 November 2019, six of the EU's finance ministers, including those of France, Germany and Italy, published a joint paper on a proposal for a European Supervisory mechanism for money laundering/ terrorist financing (the Paper). This Paper provides a guide for the European Commission with regards to the framework for revised EU AML supervision to reduce the potential for delay caused by technical deliberations.
The most notable takeaway points of the Paper are set out below:
The EBA's current role as an EU level "supervisor of supervisors" in respect of AML oversight has often been shown to result in action which is "too late." This delay in enforcement action was highlighted by Bruegel (a European think tank whose membership includes EU Member State governments, international corporations and institutions). The Paper therefore advocates for the introduction of an EU entity with a "direct" AML supervisory mandate. Such a supervisory body should be given the powers to enforce sanctions upon non-compliant firms, such as the imposition of fines or further business restrictions, which the EBA currently lacks despite recent strengthening of its AML duties. The Paper further advocates for the supervisory entity to be one which would exhibit authoritative behaviours as well as being politically independent - factors which in the view of the authors would encourage more aggressive supervision and consequently greater deterrence. It was suggested that the funding for such a body would stem from a levy on the financial industry, separate from the general budget of the EU, and which would be subject...