09 Sep 2019
The European Union must either centralise its anti-money laundering (AML) and counterterrorist financing (CFT) supervision or take further “evolutionary” steps if it is to fight financial crime effectively, an official said Thursday.
In remarks delivered to the Economic and Monetary Affairs Committee, European Banking Authority (EBA) Chairman Jose Manuel Campa called on parliamentarians to “look at the EU’s current framework critically to identify any adjustments needed” to better prevent the influx of dirty money into Europe.
While the EBA has worked in recent years to issue AML-related technical standards and promote a bloc-wide supervisory culture, the agency has a “limited” mandate to enforce standards and can only advise national authorities on how to address breaches of EU law, Campa told committee members.
Without further action by EU leaders, the EBA cannot make up for “weak provisions” in Union law, ineffective supervisory practices by member-states, limited cross-border supervision of multinational financial institutions and variances in how nations shield themselves against money laundering and terrorist financing, he said.
To address such gaps, the European Parliament should consider the adoption of a new regulatory framework that supersedes its current AML directives, according to Campa.
“A move from a directive to a regulation-based framework would help address such divergences and is arguably a perquisite to more centralisation, if so desired,” he told MEPs.
“Short of a regulation, a more concrete set of supervisory powers, jointly with more prescriptive common guidelines for sanctions of AML/CFT activities, analogous to the approach taken in the [Capital Requirements Directive] for prudential supervision, would also help,” Campa said.
In the near term, EU leaders might also consider the adoption of mandates empowering the EBA to draft legally binding standards on intergovernmental cooperation, joint risk work and related decisions in AML colleges, according to Campa, who also called for a bloc-wide harmonisation of customer due diligence practices and risk assessment methodologies for AML supervisors.
Campa’s remarks follow the granting earlier this year of new powers to the agency, including the authority to perform risk assessments on national authorities and, in some cases, to direct member-states to investigate and take action against specific financial institutions.
Under the reforms, the EBA also serves as a coordinating body for the bloc’s AML/CFT efforts.
But even with the allocation of funds to hire an additional eight staff members over the next few years, the agency will have only 11 employees dedicated to AML/CFT oversight.
As such, “one cannot expect the EBA to alone ensure a fundamental change in the system as a whole,” Campa said.
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