1 00118601 Emerging themes 2019 A4 AW v31 combined - Page 28



FINANCIAL CRIME
However, until sufficiently robust common
standards of anti-money-laundering and
counter-terrorist financing (AML/CTF) exist
across the Member States, and it is made
clear when, how and what information should
be shared, we envisage that weaknesses will
remain and the Commission’s proposals may
leave financial institutions unfairly exposed to
an EBA capable of leapfrogging national
authorities to impose sanctions.
The current problems
The Commission’s efforts to remove lacunae in the
supervision and enforcement of AML rules, most recently
exposed by a series of high profile scandals in European
banks, are to be welcomed. A leaked confidential paper,
published in August 2018 by the EU Joint Working Group
mandated to consider how to improve coordination of
AML supervision, identified numerous shortcomings in
the current framework both at domestic level between
different authorities and across borders in other EU
Member States. These include:
•a lack of precision of EU prudential rules, resulting
in differing transposition and divergent supervisory
practises across Member States;
•no detailed provisions on cooperation between AML
and prudential supervisors;
•with respect to AML/CFT supervision, the EU’s AML
framework being based on a minimum harmonisation
directive and host state supervision of establishments,
resulting in divergences in national laws that are not
conducive to coherent supervisory practises;
•AML rules that do not clarify how cooperation
between AML authorities and prudential supervisors
should take place in cross-border scenarios; and
The EU is likely to remain burdened
with many of the AML lacunae from
which it currently suffers, albeit with
a more centralised approach to
information sharing.
•the EBA lacking the powers necessary to act as the
lead authority on AML/CTF.
The Joint Working Group noted concerns that gaps in
the EU’s supervisory framework may have contributed
to the failure or serious difficulties of several European
banks and presented challenges for the control of
financial stability risks.
The Commission’s proposals may
leave financial institutions unfairly
exposed to an EBA capable of
leap-frogging national authorities
to impose sanctions.
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