Banks’ reports of suspicious transactions are inadequately followed up on by Financial Intelligence Units, criticises the Centre for European Policy Studies (CEPS) in its report. The report also calls for secure information exchange between the public and private sectors. According to the think tank’s assessment, as much as 5% of global GDP is laundered each year.
Finance Finland (FFI) has long been pushing for more extensive information exchange both within the banking sector and between banks and authorities. There is also need for more official resources and clearer legislation.
“The way things are now, each bank only sees a narrow part of the bigger picture. Information exchange would provide an overall view of where, and to whom, the suspicious funds are accumulating”, says FFI’s Head of Financial Crime and Cybersecurity Mika Linna.
Chair of the CEPS-ECRI task force, MEP Eero Heinäluoma indicated support for the financial sector’s desire to see binding legislation and its uniform implementation throughout the EU.
“Reform of the system is necessary, as the extensive monitoring work currently being carried out consumes resources yet leads to very modest results.”
Compliance costs are massive, reaching billions on the European level, and meanwhile the overall recovery of illicit assets could be as low as 1.1% according to Europol.
FFI’s Linna backs Heinäluoma’s comments: In 2019, banks reported more than 10,000 suspicious transactions to the Financial Intelligence Unit. However, only a marginal number led to pre-trial investigation or charges being filed. The prevention of money laundering takes up hundreds of full-time-equivalent work years and as much as 100 million euros in Finnish financial institutions each year.
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