In the European banking sector, the year 2018 will be remembered a.o. for a number of AML failings in several EU Member States. This has put the issue again in the spotlight of the legislator’s attention.
A first measure was to give a number of new roles and powers to the European Banking Authority in the area of AML. An agreement on the legislation had been reached in inter-institutional negotiations in early Spring.
Politically the legislator will nevertheless not leave it at that. This has been made very clear by the Commission’s July package on AML. The latter includes four reports on:
- A supranational risk assessment on AML/TF (anti money-laundering and fight against terrorist financing)
- Cooperation between national financial intelligence units (FIUs) in the EU as well as with third countries
- The connection between national bank account registers and data retrieval system
- An assessment of recent AML cases involving EU financial institutions
Interestingly the four reports were accompanied by a communication sketching the Commission’s thinking on the way forward. From the above reports the Commission concludes that ‘fragmentation and failures in the application to the legal framework pose threats to the integrity of the Union’s financial system and the Union’s security more generally’. As a remedy it suggests that an option could be the transformation of the AML directive into a regulation. Indeed rather than a directive which needs to be transposed into national law a regulation is directly applicable in the Member States. The Commission also considers transferring specific AML supervisory tasks to a Union body. The latter could in practice be either the European Banking Authority (EBA) which as mentioned above does already have a number of AML powers or a separate dedicated AML agency. The Commission also points to the need for a stronger mechanism to further cross-border cooperation and analysis by national FIUs.
In order to go down the legislative path sketched out above, the Commission will need the approval of the co-legislators i.e. the European Parliament and the Council. The former seems to be seeing eye-to-eye on a number of the suggested ideas. Indeed last week the European Parliament’s plenary adopted a resolution lamenting regulatory and supervisory fragmentation in the area of AML/TF, calls on the Commission to assess whether a regulation would be more appropriate than a directive, points to the need for better cooperation between FIUs and calls on the Commission to carry out an impact assessment on the possibility and appropriateness of establishing a cooperation mechanism between FIUs. It adds a call on the Commission to assess the possibility of establishing next to the existing black list a grey list of high-risk third countries. Notably absent is nevertheless the concept of new powers to a Union body as suggested by the Commission.
All the above seems to indicate that we are heading towards an AMLD 6 potentially together with a regulation (AMLR) in the months and years ahead.
AML professionals will have to watch developments closely and we will come back to the issue in this space.
By Antoine Kremer, Head of European Affairs, ABBL & ALFI