EBA Decision to Drop Danske Bank Probe Draws Calls for EU Legislation
01 May 2019

The European Commission’s top policymaker for the financial services sector has called for the EU to adopt new legislation in response to a decision earlier this month to close a bloc-wide investigation into the supervision of Danske Bank, the Financial Times reported.

The European Banking Authority (EBA) voted on 16 April to reject an internal report that identified four breaches of EU law by Danish and Estonian supervisory authorities related to their oversight of the bank, which is accused of being a conduit for €200 billion in suspicious transaction linked to a Russian money laundering scheme, the newspaper said.

The 45-page draft report cited “significant shortcomings” in the coordination by the two financial supervisors, insufficient policing of Danske Bank’s due diligence controls and inadequate reviews of the institution’s governance arrangements, according to the news outlet, which obtained a copy of the rejected report.

“It is disappointing that the board of supervisors of the EBA did not act on one of the biggest money-laundering scandals in Europe,” European Commission Vice President Valdis Dombrovskis told the Financial Times. The rejection of the report underlines the need to pass new legislation that would “transform” how the EBA takes such decisions, he said.

A former EU and Latvian parliamentarian, Dombrovskis oversees the commission’s financial services and financial stability policymaking.

The European Banking Authority has defended its decision in letters to the European Commission and EU lawmakers, noting that the draft report had been “rejected conclusively” by its board of supervisors, which is comprised of senior officials from EU central banks and other banking groups.

“A number of members of the board of supervisors, while acknowledging that with the benefit of hindsight there were failings in the supervision by the two authorities, did not consider that those failing amounted to a breach of union law,” the banking authority said in the letter, according to the Financial Times.

Under legislation adopted by the European Parliament in April, the EBA could soon be empowered to take on a stronger role in preventing money laundering in the economic bloc, including by conducting peer reviews of the supervisory authorities of member-states and recommending specific enforcement actions to national governments.

The proposal has yet to be considered by EU ministers.

Read more:

EU banking watchdog clears Estonian, Danish regulators over Danske Bank

Money Laundering at Danske Bank: Lessons for financial crime professionals (Part 1)

EU Parliament Empowers EBA, Prudential Regulators to Fight Money Laundering

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