A new European Union (EU) authority to fight money laundering will likely oversee the establishment of EU-level anti-money laundering and counter financing of terrorism (AML/CFT) supervision if a package of four legislative proposals to strengthen the union’s (AML/CFT) rules is adopted (Trade-based Financial Crime, 21 July 2021, New EU AML Authority centrepiece in European Commission’s ambitious new AML/CFT proposals).
The EU AML Authority (AMLA) is also expected to support a cooperation mechanism for national financial intelligence units (FIUs) in EU member states.
Banking and supervisory failings
AMLA is at the heart of the European Commission’s legislative proposals and will be the central authority coordinating national authorities to ensure the private sector correctly and consistently applies EU rules.
The establishment of AMLA is the EU’s response to several incidents featuring a lack of proper implementation by financial institutions and other firms or of adequate countermeasures taken by supervisors.
Closing loopholes
The establishment of direct European supervision of those entities that bear a high money laundering or financing of terrorism risk aims to close loopholes, in particular for cross-border supervision.
At the same time, it aims to coordinate national supervisory authorities and assist them to increase their effectiveness.
Cross-border dimensions
All recent major money laundering cases reported in the EU had a cross-border dimension the commission has pointed out.
However, it says the detection of these financial movements is left to the national FIUs and to cooperation among them. But the absence of a common structure to underpin this cooperation leads to situations where joint analyses are not performed for lack of common tools or resources.
Exchanges and capacity building
These divergences hamper cross-border cooperation, and thereby reduce the capacity to detect money laundering and terrorism financing early and effectively.
For the establishment of a FIU coordination and support mechanism, the new authority is expected to play a central role in strengthening and facilitating joint analysis between FIUs, supporting the FIUs’ analyses and promoting exchanges and capacity building among FIUs and other competent authorities.
More information on the European Commission’s package and links to texts of the four legislative proposals can be found here.
Categories: Trade Based Financial crimes News
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