28 June. The European Court of Auditors has just published its special report on EU anti-money laundering measures in the banking sector. Their verdict: “EU efforts to fight money laundering in the banking sector are fragmented and implementation is insufficient”. The auditors criticise a “lack of coordination at EU level” to prevent money laundering and terrorist financing. Supervision is predominantly taking place at national level – while oversight by the EU is “insufficient” to ensure high standards across all Member States.
The core criticism of the European Court of Auditors is the incomplete implementation of the EU directives against money laundering. The Commission takes too long to check the national implementation of EU law and, if necessary, to initiate infringement proceedings. The Commission’s risk analysis for the European internal market also lacks geographic focus, prioritisation of particularly vulnerable sectors and information on how the risk situation has developed over the years. In addition, the Commission had only made use of its right to report breaches of EU law to the European Banking Authority (EBA) in a very limited and ad hoc manner. Where this was done, the EBA has acted, if at all, with unreasonable, “excessive delays”. Although the EBA can investigate breaches of Union law on its own initiative, it has not made use of this right of initiative since the Authority was established in 2010. In at least one investigation of a national breach of Union law by the EBA, the auditors found evidence of lobbying to influence the decision. All 27 Member States are represented on the EBA’s Supervisory Board while the EU Commission has no voting rights. Unfortunately, this organisational structure repeatedly leads to national interests being given priority over European ones.
According to the auditors, the exchange of information between relevant actors was a problem in several institutional constellations: First, the exchange of information between the European Commission and the EBA did not take place systematically. Second, the exchange of information between the European Central Bank and the national financial supervisory authorities could be improved. Third, the European External Action Service did not cooperate with the Commission in a timely manner, which delayed the establishment of the list of high-risk third countries.
Another low point in the fight against money laundering occurred last Friday (25 June): Malta was placed on the global “grey list” for money laundering and terrorist financing by the Financial Action Task Force (FATF). It is the first time that an EU Member State has been placed on this list due to increased and persistent money laundering risks. During the plenary session of the FATF, where the classification was decided, the Commission reportedly tried to protect Malta. Besides Malta, the Philippines, Haiti and South Sudan were also added to the so-called grey list on 25 June.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“The report of the European Court of Auditors is devastating. As guardian of the Treaties, the European Commission must enforce existing EU law against money laundering and terrorist financing without delay. The European Commission is very good at proposing new rules and new institutions. It is irresponsible for it to grossly neglect the enforcement of existing laws in the Member States. The European Banking Authority must now initiate proceedings in all cases where systematic breaches of Union law related to money laundering are identified. I also call on EBA Chairperson José Manuel Campa to immediately make use of his new rights to initiate proceedings against breaches of Union law. Europe still has a national patchwork of anti-money laundering rules and supervisory authorities that makes life easy for criminals. By sabotaging the work of the EBA, Member States are ultimately harming themselves. The European Commission is not doing the Member States any favour by letting them get away with negligently disregarding European law.
It is embarrassing that it takes a global network like the FATF as well as the US to sanction corruption and organised crime in the EU. Instead of consistently demanding the implementation of anti-money laundering laws in the Union, the European Commission prefers to protect Malta. We cannot stand idly by while organised gangs undermine our rule of law and our economy. The European Commission needs a massive expansion of its capacities in the area of financial crime. On the operational side, the capacities of the police and law enforcement must be consistently expanded. The launch of the European Public Prosecutor’s Office was an important step in the right direction. Now the European Chief Prosecutor Laura Kövesi needs a far-reaching mandate as soon as possible to be able to prosecute money laundering also when it is not directly related to the EU budget.
In July, the European Commission will present its new legislative package against money laundering. This will transform part of the EU directives into an EU-wide regulation. This is an overdue step to ensure uniform rules. I call on the Commission to close obvious loopholes once and for all with this new regulation. It must no longer be possible to register straw men and women instead of real owners. In the European Parliament, I will push for increased parliamentary scrutiny, starting with a public hearing before the Economic and Monetary Affairs Committee. We will not stand idly by while the European Commission and the European Banking Authority disregard their legal duties.”
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The European Court of Auditors’ Report: https://www.eca.europa.eu/Lists/ECADocuments/SR21_13/SR_AML_EN.pdf
Unprecedented: Malta placed on the global grey list for money laundering: https://sven-giegold.de/en/malta-on-global-grey-list-for-money-laundering/
Jurisdictions under increased monitoring list June 2021: https://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/documents/increased-monitoring-june-2021.html
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