The European Commission has put forward a comprehensive approach to further strengthen the EU’s fight against money laundering and terrorist financing. The Action Plan for a Comprehensive EU policy on Preventing Money Laundering and Terrorist Financing was published on 7 May. The 12-month action plan lines up well with the views of the European Banking Federation . Concrete legislative proposals can be expected in early 2021. EU-level development of anti-money laundering action is among the Commission’s top priorities in financial crisis management as well.
Finance Finland (FFI) supports tightening money laundering supervision at both national and EU levels. Banks and other monetary institutions are strongly opposed to being used to cover up illicit activities. Monetary institutions are also subject to legislation that obligates them to report all suspected attempts of money laundering.
The anti-money laundering action plan is built on six pillars, one of which is a single EU rulebook. The objective of the rulebook is to harmonise anti-money laundering obligations across EU Member States. The objective is driven by both under- and over-regulation: some Member States have failed to reach the minimum provisions set in EU Directives, while others suffer from excessive national regulation.
“The Finnish insurance sector, for example, is subject to regulation that needs to be carefully evaluated in terms of compatibility with the single EU rulebook”, says Mika Linna, head of financial crime and cybersecurity at FFI. Linna is also a member of the Centre for European Policy Studies (CEPS) anti-money laundering task force.
The Commission is also planning a proposal for organising EU-level supervision in the future. The options are to either establish a new EU-level authority, or expand the powers of the European Banking Authority (EBA).
“In defining the new European anti-money laundering supervisor, it should be noted that 20–30 percent of money laundering takes place outside of the financial sector. EU-level supervision must therefore be implemented in a way that doesn’t confine it to the financial sector only”, Linna asserts.
The Commission plans to ensure the timely and effective implementation of EU regulation in different Member States with country-specific recommendations issued by June.
“Even though the harmonisation of regulation is important, the prevention of money laundering should be kept primarily based on risks. One of the main challenges here is clarifying the risk-based approach and harmonising the methods and criteria related to it”, Linna points out.
Read the Commission’s action plan in full here.
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