Dirty money is still sweeping across Europe, despite new anti-money-laundering (AML) powers for the EU’s banking watchdog. That’s according to the new head of the organisation, the European Banking Authority (EBA).
In an interview with the Financial Times, José Manuel Campa said that powers given to the Authority in the wake of the €200 billion ($226 billion) Danske Bank money-laundering scandal won’t do enough to shore up Europe’s defences against criminals passing illicit cash through the banking network.
“I don’t think the mandate that the EBA has received is the mandate that will solve that problem. It is not a mandate to harmonise AML, either regulation or practices, across the union. Because to start that process you first need legislation,” he said.
In the wake the Danske Bank scandal, in which Denmark’s largest bank was accused of failing to stop money laundering through its Estonia unit, the European Commission centralised AML activities at the EBA, but these have been limited to collecting and analysing data to ensure that national authorities are dealing with the problem.
For any central authority to combat money laundering across the EU, AML rules would first need to be harmonised in the region. “You need to start with regulation that is homogeneous. We don’t have that. […] If you have a single rule book you can start thinking about a single authority,” Campa told the FT.
In related news, Deutsche Bank auditors have uncovered serious failings in AML and sanctions controls at its London offices. These allowed cheques and electronic payments to be processed without proper screening for a number of years.
In September 2018, Germany’s Federal Financial Supervisory Authority, BaFin, rebuked Deutsche Bank for AML failures and installed an external monitor to supervise improvements. In February, the bank was found to have cleared €160 billion ($181 billion) of transactions for Danske’s Estonia unit. In 2016, the UK’s Financial Conduct Authority (FCA) placed Deutsche Bank under special measures for systemic AML failures.
Earlier this year, British bank Standard chartered was ordered to pay a total of $1.1 billion (£842 million) by US and UK authorities for money laundering activities and breaching economic sanctions.
The fines were made up of $947 million (£723 million) levied by the US Department of Justice and other agencies for sanctions violations in Iran, Burma, Zimbabwe, Cuba, Sudan, Syria, and Iran, and £102 million by the FCA for anti-money-laundering breaches, including shortcomings in measures designed to tackle terrorist financing.
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