This month, the European Union revealed its plan to set up a new agency, the Anti-Money Laundering Authority (AMLA), to crack down on money laundering. According to the European Commission’s (the Commission) documents, the AMLA will “become the "centrepiece" of an integrated supervisory system also made up of national authorities.” It also sees the Commission attempt to implement one of the six pillars in its 2020 Action Plan as the bloc attempts to tackle the region’s problems with money laundering.
2018 was the tip of the iceberg after it emerged that billions of dollars in suspicious transactions originating in Russia and several ex-Soviet states had flowed through Danske Bank. Many other large European banks were soon swept up in the scandal we now refer to as the Russian Laundromat. Despite the EU’s enhancements to its established regulatory framework around the time, the scheme was not exposed through the diligence of its supervisory body. It was solely a consequence of whistleblowing and diligent investigative reporting. The EU’s current system, which outsources financial crime enforcement to national authorities, was in need of extensive reforms as per the Commission’s assessment following the last EU elections in 2019. The issues with its existing architecture boil down to three fundamental weaknesses:
- National financial supervisors have no efficient way to communicate with one another and the ECB, which has the overall responsibility for bank oversight.
- Supervisors in smaller countries are often left on their own with limited resources to address the sophisticated transnational threat.
- The system encourages growth in countries that are perceived to be a weak link from suspect clients.
This new strengthened regime is the Commission’s boldest attempt at tackling financial crime by rectifying the issues with its existing architecture, and by closing loopholes and harmonizing regulatory practices across its member states, and is certainly one to watch as it continues to develop in the near future.