Banking Alert! A single agency for AML/CTF supervision in the EU

In the wake of high profile scandals that have highlighted deficiencies in adequately tackling financial crime, the European Union (EU) is leaning towards stepping up the supervision and enforcement of its legislation at a centralized level.

EU-wide Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) rules are established through Directives, but implementation remains domestic, with each Member State being responsible for the local application of such rules. Consequently, the methodologies employed by the AML/CTF supervisory bodies vary widely within the EU area and, as recent cases have proved, can fall well below expected standards.

Brussels senior officials recently noted that the European Commission is working on proposals that would give the European Banking Authority (EBA), the EU’s banking regulator, greater enforcement powers and more resources to investigate the activities of banks involved in money laundering. In parallel, the Commission is also looking to give the European Public Prosecutor’s Office (EPPO) powers to launch investigations focused on the financing of terrorist activity across its Member States starting from 2025.

These measures would help to establish a cross-border response to address the global nature of financial crime by ensuring a stronger pan-EU supervision of national bodies.

European Central Bank’s Board member Benoit Coeure has also shown support for this objective by stating that the Board supports “any initiative that leads to a more harmonized and more coordinated approach to anti-money laundering. Ideally this would be a single agency”.

On Wednesday, September 12, European Commission President Jean-Claude Juncker will deliver his annual State of the Union Address at the European Parliament. The issue of money laundering is expected to feature within the initiatives and solutions related to EU’s future development.