As published on finextra.com, Thursday 11 June, 2020.
Money laundering is the practice of disguising the illegal origin of criminal proceeds.
Suspicious transactions linked to money laundering amount to hundreds of billions per year within the EU. The European Court of Auditors (ECA) has started an audit to examine the Union’s efforts to tackle the laundering of dirty money, focusing specifically on the banking sector.
The EU’s anti-money laundering (AML) directive has been in place since 1991, and has been updated on four occasions - most recently in 2018. The Commission, the key player at EU level, has the role of developing and enforcing AML rules in close cooperation with the Member States. This year the European Banking Authority (EBA) took on the tasks of leading, coordinating and monitoring the EU financial sector’s fight against money laundering. It is the responsibility of the Member States to apply and enforce the EU’s AML rules through national legislation, and to prosecute money laundering offences. Within Europe, Europol estimates the value of suspicious transactions at around 1.3 % of EU GDP.
“Money laundering is increasingly a serious global threat, with criminals often seeking to launder money where controls are weakest, often far from the source of the funds”, says Mihails Kozlovs, the member of the European Court of Auditors responsible for the audit. “Given the enormous scale of this criminal practice, including in the EU, and a number of recent high-profile scandals involving banks, we have decided to audit the effectiveness of the EU’s action in the fight against money laundering in the banking sector”.
Despite extensive international cooperation and increasingly sophisticated EU legislation, money laundering remains a huge policy challenge. The auditors will focus on the transfer of EU legislation into Member State law, how risks to the internal market are managed, co-ordination between national supervisors and EU bodies, and the EU’s action to remedy breaches of its AML law at national level. The fieldwork for this audit will address the European Commission’s Directorate General for Financial Stability, Financial Services and Capital Markets Union, the EBA and the European Central Bank.