The future of EU policy on preventing money laundering and terrorist financing

Robert CaringtonOn 27 January 2021, Paolo Panico TEP, the Chair of STEP Europe, moderated a webinar hosted by Anti-Money Laundering Europe (AME) on the future of the European Union’s policy on preventing money laundering and terrorist financing.

The panel included Steve Ryan, deputy head of the financial crime unit in the Directorate-General (DG) Internal Market and Services of the European Commission (EC); Eero Heinäluoma, Member of the European Parliament (EP); and Roger Kaiser, Senior Policy Advisor, European Banking Federation.

The EC stated that it planned to unveil its consultation feedback and a new legislative package in the near future following the May 2020 action plan.

The consultation feedback had reportedly showed support for EU action in this area as well as significant support for further harmonisation in all areas, particularly for obliged entities and beneficial ownership registers.

The proposed legislative package will focus on only three out of the six pillars of the action plan, which are a harmonised rulebook; EU level supervision; and a coordination and support mechanism for financial intelligence units (FIUs). The plan is for the package to be adopted in spring 2021.

The main proposals of the package for each pillar are:

  • to put in place a more integrated framework;
  • to establish a new AML authority at the centre of an EU AML supervisory system. This should have direct supervisory powers over financial institutions and oversight/coordination powers in the non-financial sector;
  • to set up a mechanism to coordinate and support FIU work, fully integrated in the new AML authority. It will provide technical support and assistance to analysis produced by FIUs, including joint work.

The EP representative called for an updated rulebook to keep up with new developments like crypto-assets, and noted that supervisors should be supported with appropriate tools and resources. It stressed that reform is needed and was looking forward to receive the EC proposal.

Industry representatives called for a single EU rulebook and supervisory convergence and stressed the need to avoid a ‘tick the box’ approach, or any regulatory or supervisory fragmentation. It also called for guidance to help balance out GDPR and AML requirements.

 

Robert Carington is Policy Executive at STEP

STEP joins Anti-Money Laundering Europe webinar on the future of the EU’s fight against money laundering

Robert CaringtonOn 3 June, STEP joined a webinar hosted by Anti-Money Laundering Europe (AME) on the future of the European Union’s fight against money laundering.

John Riches TEP, Chair of STEP’s Public Policy Committee, was joined on the panel by Jérôme Deslandes, Cabinet of the Executive Vice President of the European Commission; and Piers Haben, Director for Banking Markets, Innovation and Consumers at the European Banking Authority (EBA). The chair was Mike Savarese, AME.

The webinar discussed the European Commission’s package on anti-money laundering (AML) published on 7 May.

Its main item was an action plan, accompanied by a list of high-risk third countries, and a methodology describing how these were chosen. The action plan aimed to address the weaknesses identified in research from 2019 and was based on the following six pillars:

  1. Better implementation of rules – This will be achieved by a number of tools particularly interconnection of beneficial ownership registers, more powers for the EBA and a focus on country-specific recommendations. The eventual aim is for an EU supervisory body responsible for conducting on-site examination on the effectiveness of the AML framework.
  2. Harmonised rulebook – This will be achieved by sharing information, integrating the latest Financial Action Task Force (FATF) standards and building on the good examples of member states.
  3. EU level supervision – This integrated AML system will need to be jointly run by the EU and national authorities.
  4. Coordination and support mechanisms for FIUs (Financial Intelligence Units) –Through common templates and tools, standards on feedback, support of joint analysis and training.
  5. Law enforcement and information sharing – New tools such as criminalisation of money laundering, a Directive on the use of financial information and rules on asset recovery (including mutual recognition of freezing orders) will be used.
  6. EU’s global role – This will be achieved through the new methodology and the list of high-risk third party jurisdictions that pose a threat to the EU’s financial system.

John Riches’ view on these developments from a private sector perspective, was that due to the rapid development of the EU’s AML framework, member states appear to have struggled to implement past incarnations of AML. He observed that there seemed to be an inconsistency in approach between states, resulting from a lack of clarity and practical guidance.

His main concerns were over beneficial ownership registers and transparency, and how this lack of clarity had made implementation of trust registers difficult, and also potentially unfair. He noted that the uncertainty over some of the provisions in the Fifth Anti-Money Laundering Directive showed a lack of understanding on how trusts work. He also voiced major concerns over the potential conflict of public registers versus privacy rights.

The panel heard that the EU is aiming to be assessed as a single jurisdiction, with a single supervisor and rule book, within five years, so will be recognised as such by FATF. This single approach is seen as being cheaper and more efficient, and a more effective way of achieving a stronger, more unified and robust system.

The event ended with John Riches stressing that the EC consultation should be much more than a box-ticking exercise, and something more meaningful, which will benefit everyone.

Robert Carington is Policy Executive at STEP