Brussels is seeking tougher European-level enforcement of anti-money laundering rules after a spate of scandals that have shaken faith in the bloc’s ability to keep dirty money out of its financial system.
Valdis Dombrovskis, the European Commission’s vice-president in charge of the euro, told the Financial Times in an interview that Brussels was already thinking about how to go beyond “quick fix” proposals it made in September for reinforcing supervision of banks’ conduct.
Those plans, which have already won support from governments, would give the EU’s European Banking Authority greater powers to co-ordinate the work of national banking watchdogs.
Mr Dombrovskis said the measures would spur “convergence” of supervisory standards across the EU. But he said there was scope to go further and that his officials were looking at “more long term, more structural solutions” to present options to governments in 2019.
The enforcement of anti-money laundering rules has shot up the political agenda after allegations that EU banks were being used for everything from laundering the proceeds of crime to funnelling money to North Korea’s nuclear programme. Some of the high-profile scandals included revelations that as much as €200bn of dirty money went through the Estonian branch of Danske Bank, the Danish lender, and accusations from US authorities that Latvia’s ABLV was involved in “institutionalised money laundering”.
More than 170 police officers, prosecutors and tax inspectors raided Deutsche Bank’s Frankfurt headquarters in November on concerns about the activities of a British Virgin Islands-based unit, and supervisors shut down Maltese lender Pilatus, which was at the centre of murdered journalist Daphne Caruana Galizia’s reporting on allegations of government corruption.
“You see those money laundering scandals across the EU,” Mr Dombrovskis said. “It is not concentrated in a few countries and therefore we think we need to act.”
“The main problem is not that we do not have anti-money laundering rules,” he said. “We have . . . rules and actually quite strict ones. So the question is how uniformly they are enforced across the EU.”
EU rules require banks to carry out background checks and other due diligence requirements on their customers.
There are also legal requirements for national authorities to share information on suspect financial flows.
European regulators, including senior officials at the European Central Bank, have called for a major transfer of responsibilities away from national authorities to ensure that the bloc’s anti-money laundering directives are applied more thoroughly.
Benoît Cœuré, a member of the ECB’s executive board, is among those advocating the creation of a “single agency” that would take on anti-money laundering enforcement, while stressing that he does not think that the Frankfurt-based central bank should have the role.
Mr Dombrovskis said work on policy options was continuing but that it was “clear that there is an enforcement problem”.