EU to Set Up an AML Agency

AML Agency EU

In the same spirit as the cybersecurity task force that is in the works, the European Commission has announced it plans to launch the Anti-Money Laundering Authority (AMLA) with the purpose of tightening up regulations pertaining to AML and combat the financing of terrorism.

Earlier this week, Mairead McGuinnes, who serves as EU commissioner for financial stability, financial services and the Capital Markets Union, said, “Behind the story of dirty money are terrible crimes which are awful for citizens, within society, families and communities.”

With this in mind, she added, “Tackling money laundering is tackling crime at its very heart. In essence, we have looked at where the gaps are in our regulatory framework and we have said: enough is enough.”

“It’s no longer enough for member states to do separately what they are doing (to fight money laundering). We need active supervision and coordination,” McGuinness concluded.

Dirty money scandals have rocked the region in recent years, involving banking institutions in Sweden, Denmark, Finland and many of the Baltic states via which wealthy Russians have laundered their money.

In one of the more recent cases, Danish Danske Bank is being investigated in Estonia, Denmark, the USA, the UK and France for facilitating the laundering of $230 billion by rich Russians.

According to the plans laid out by the European Commission, AMLA, which should be up and running in 2024 somewhere in Europe, will be staffed with 250 employees by 2026 and fully equipped to monitor cross-border financial activities within the EU and hand out fines of up to 10 million Euros or 10% of a company’s annual revenue.

Similarly, the agency will pay closer attention to Bitcoin and other cryptocurrencies, vehicles used by criminal gangs and terrorists to move money around and fund their criminal activities.

AMLA should cost about 45.6 millions Euros to set up and operate and would serve the role currently in the hands of the European Banking Authority (EBA), which has been acting as a coordinator of sorts between Member States and the enforcement of current AML rules.

Now the plan has to appear before the European Parliament to be fine tuned and ultimately approved by the EU’s 27 Member States.

Interested parties have welcomed this initiative and its effort to take on financial crime.

Joseph Delhaye, who leads the European Savings and Retail Banking Group’s (ESBG) legal and retail committee, said, “The consistent and integrated EU-wide supervision and the risk-based approach of the new regulations are steps in the right direction,” adding that “ESBG members are fully committed to continue fighting money laundering and believe that a clear and practical regulation will be key to make these efforts most effective.”

Despite this positive outlook, other analysts have suggested this might not be enough unless the foundations to combat money laundering and financial terrorism are strengthened.

In an op-ed for the Financial Times, Karel Lannoo, CEO of the Centre for European Policy Studies in Brussels, writes: “The commission’s plan includes legal and regulatory initiatives as well as a single AML agency. However, fundamentally new methods are required to detect money laundering. They should consist of a truly risk-based regulatory framework and enhanced co-operation between financial and non-financial supervisors, financial intelligence units and judicial authorities. To detect suspicious cases, co-operation needs to be developed within the private sector, and between the private and public sectors. Ample use of technology can be made, while respecting data privacy, areas of competence and free competition.”

Europol, Europe’s police agency, reports that suspicious financial activities amount to 1% of the region’s 13 trillion Euros in GDP.

What are your thoughts on AMLA and how effective it will be in combating money laundering and financial terrorism?

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