01 March 2023

SSM's Fernandez-Bollo: Preventing money laundering through European banks

...we hope for a timely agreement to create a new and strong EU Anti-Money Laundering Authority (AMLA). The European Parliament will soon vote on the draft AMLA Regulation, after which the trilogue phase will begin...

Imagine international drug traffickers use your bank to launder their illicit gains. Now imagine that the different supervisory authorities involved all take different approaches to tackling this risk and fail to sufficiently communicate with each other. This would result in too many money laundering and terrorist financing (ML/TF) activities slipping through the cracks, representing a major risk to the financial sector.

As Europeans and as banking supervisors, we do not want this to happen. That is why we hope for a timely agreement to create a new and strong EU Anti-Money Laundering Authority (AMLA).

The European Parliament will soon vote on the draft AMLA Regulation, after which the trilogue phase will begin. During this decisive stage in the legislative process, we think it is important to help ensure that AMLA can effectively fulfil its remit. The ECB is fully committed to contributing to this process. Based on our supervisory experience, this requires three main safeguards, namely that the new Authority has sufficient capacities to perform intrusive supervision, broad access to data and adequate cooperation channels with other supervisors.

The right supervisory capacities

To help ensure greater homogeneity and convergence in the European supervisory framework for anti-money laundering and countering the financing of terrorism (AML/CFT), AMLA needs to be a strong and independent authority. That is why the ECB has called for the new Authority to have a broad scope of direct supervision covering at least one entity – ideally a group – in each Member State. We therefore welcome the Council of the European Union’s proposal to significantly increase the number of entities under AMLA’s direct supervision to up to 40 (compared with 12 to 20 in the original proposal), also allowing for further expansion in the future.

It is now important to ensure that AMLA has sufficient capacities to fulfil its tasks, particularly in view of the scope of its direct supervision. This is relevant for AML/CFT off-site supervision, where AMLA’s staff will work in joint supervisory teams alongside staff from national supervisors. However, ensuring AMLA has sufficient staff is even more important for carrying out on-site AML/CFT inspections, which are the most intrusive supervisory tool at the Authority’s disposal and key to developing a feel for what is going on at supervised entities. This is particularly relevant for AML/CFT supervision, where access to individual transaction data and files is crucial. Consequently, it is essential that AMLA can count on a sufficiently large pool of qualified on-site examiners to effectively perform its supervisory tasks. Based on our own experience with prudential banking supervision, responsibilities for on-site examinations and off-site supervision should ideally be allocated to different teams, and the capacity to use cross-border teams is invaluable....

 more at SSM

© ECB - European Central Bank