Despite the rhetoric in Europe on tackling money laundering, cases continue to come to light. Politician should act together now, says Stefanie Linhardt. 

Here we are again: 2018 has uncovered a number of alleged money laundering cases at European banks and instances where lenders were lacking in attention to anti-money laundering (AML) and know your customer guidelines. And while EU lawmakers and the member states’ leaders were quick to agree that more scrutiny of banks' AML measures is needed and the fifth version of the AML Directive was pushed through in July, there are some bigger questions that still need answers.

How is it that in 2018 there are still so many legacy and live cases of money laundering creeping up? And why is it a US – mainly the US Treasury’s Financial Crimes Enforcement Network (FinCEN) – rather than a European authority that points the finger and highlights AML shortcomings, such as in the case of Latvia’s second largest bank by assets on year-end 2016 data, ABLV Bank?

ABLV’s direct supervisor through the single supervisory mechanism (SSM) is the European Central Bank (ECB). But curiously AML does not fall under the SSM’s mandate. AML supervision, as well as its enforcement, is a matter for national authorities within EU member states.

To effectively fight financial crimes cross-border within the EU, either the ECB needs wider ranging supervisory powers or another EU authority is required to take a unified lead. It is not sufficient to pass a (fifth) AML Directive in July 2018 that does not have to be transposed into national law until January 2020 – and which will ultimately have 28 different implementations (the UK government, despite Brexit, has announced it will adhere to the latest revision of the directive and transpose it into national law).

Some say the biggest issue is not supervisory powers, however, but the policing of, and enforcement actions against, financial crimes, which almost always cross borders. And while there has been more emphasis on international co-operation to fight financial crimes in the four reviews of the AML Directive, more could – and should – be done. Political leaders need to pick up the baton.

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