European Commission adopted a Communication towards better implementation of the EU’s AML/CTF framework

The European Commission (EC) adopted a Communication and four reports that will support European and national authorities in better addressing money laundering and terrorist financing risks. This package will serve as a basis for future policy choices on how to further strengthen the EU AML framework.

A Communication gives an overview of the four reports: 1) the supranational risk assessment report, 2) the assessment of recent high-profile money laundering cases in the financial sector, 3) the Financial Intelligence Units report, and 4) the interconnection of central bank account registries’ report.

 

The following are key findings presented in a Communication:

  • anonymous products, the identification of beneficial owners and new unregulated products such as virtual assets are named as current horizontal vulnerabilities. Some of these will be addressed by the upcoming transposition of the fifth Anti-Money Laundering Directive, for example through the inclusion of virtual currency providers in the scope of the Directive and the expansion and wider accessibility of beneficial ownership registers;

  • the analysis of recent alleged money laundering cases involving EU credit institutions revealed that credit institutions lacked the right internal mechanisms to prevent money laundering and did not align their AML/CTF policies when they had risky business models. The findings also highlighted a lack of coordination between such policies, either at the level of individual entities or at group level;

  • regarding the supervision of a banking group, the supervisors had a tendency to rely excessively on the AML framework of host Member States and this impinged on the effectiveness of supervisory actions in cross-border cases at EU level;

  • some Financial Intelligence Units fail to engage in a meaningful dialogue with obliged entities by giving quality feedback on suspicious transaction reports. The lack of templates for reporting also hampers the quality of the reports by obliged entities;

  • the interconnection of national centralised automated mechanisms of the Member States on bank accounts is technically feasible and that, given that a future EU-wide interconnection of the centralised mechanisms would speed up access to financial information and facilitate cross border cooperation, EC intends to further consult with relevant stakeholders, governments, as well as Financial Intelligence Units , law enforcement authorities and Asset Recovery Offices as potential “end-users” of a possible interconnection system.

 

EC concludes that the findings are to inform the debate about how the framework for AML/CTF could be further improved and to provide the basis for further discussions with relevant stakeholders.

 

Consideration could be given to further harmonizing the AML/CTF rulebook. One option would be the transformation of the Anti-Money Laundering Directive into a Regulation, which would have the potential of setting a harmonized, directly applicable Union regulatory ALM framework. Different alternatives could also be envisaged in order to ensure high quality and consistent anti-money laundering supervision of the financial sector, which may require conferring specific anti-money laundering supervisory tasks to a Union body.

 

The full Communication is available here.

 

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