The European Commission's Economic and Financial Affairs Council is meeting today, 22 January, to discuss a range of topics, including its ongoing negotiations on reviewing the existing architecture of financial supervision, which include a strengthening of anti-money laundering (AML) rules.
EU finance ministers will decide on whether to support the presidency's proposals on AML, which would take the decision-making and regulatory process a step nearer to implementing tightened rules on AML and terrorist financing activities.
In September 2017, the Commission put forward proposals to improve the mandates, governance and funding of the three European supervisory authorities (ESAs), which consist of: the European banking authority (EBA), the European insurance and occupational pensions authority (EIOPA) and the European securities and markets authority (ESMA). Then in December 2018, EU ambassadors approved a partial mandate for negotiations on the AML component of the proposal. The economic and financial committee of the European Parliament adopted its position on the full review of the European system of financial supervision on 10 January 2019. Should ministers decide to support the presidency's proposal to move ahead with the AML part, trilogue negotiations could in principle start with the agreement of the European Parliament.
The need for tighter rules follows a number of recent incidents involving money laundering in EU banks. This European Parliament document outlines five of these recent cases:
- Liquidation of directly supervised ABLV in Latvia
- Liquidation of Versobank in Estonia
- Pilatus Bank in Malta
- Danske Bank’s branch in Estonia
- ING - settlement with Dutch authorities regarding AML shortcomings
Furthermore, in the period October 2015 to March 2017, the UK Financial Intelligence Unit received 634,113 suspicious activity reports. All of which raises concerns that AML rules are not being correctly enforced in Europe. According to identity verification experts at the global identity and business verification company Trulioo, a more global approach to money laundering will help to reduce risk within the financial services sector.
Trulioo's Zac Cohen said that the use of artificial intelligence in automated systems can help to check customer identity and ultimate beneficial owners of legal entities, an important element in the fight against money laundering. Cohen adds: “Due to limited transparency and information sharing, banks and other financial institutions are vulnerable to financial crime. If proper anti-money-laundering procedures aren’t in place, these institutions face major consequences, such as large fines – or even imprisonment – and a rise in fraudulent activity. In order to transmit counterfeit funds through banks, bad actors are turning to more sophisticated techniques such as under or over-invoicing, falsifying documents and misrepresenting financial transactions.”
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