24 July 2019

European Commission: Report assessing recent alleged money-laundering cases involving EU credit institutions

The aim of this report is to indicate the shortcomings and lessons learnt and to provide evidence with a view to informing any further policy actions, should they be considered necessary.

Over time, the Union has developed a solid regulatory framework for preventing money laundering and terrorist financing, in line with international standards adopted by the Financial Action Task Force. However there have been a number of recent incidents involving European banks which have focused attention on how Union rules have been implemented.

On 12 September 2018, the Commission published a Communication proposing immediate actions intended to address some of the more readily identifiable regulatory and institutional inadequacies, followed by a more recent Communication on the Economic and Monetary Union, in which the Commission reiterated that those immediate actions must be followed by a deeper reflection about what further measures might be needed in order to ensure the effectiveness of the framework for anti-money laundering and countering the financing of terrorism in the long-term.

The Union’s co-legislators also agree on the need to identify any structural flaws in the current regulatory and supervisory framework. The European Parliament’s Committee on Financial Crimes, Tax Evasion and Tax Avoidance and the Committee on Economic and Monetary Affairs have repeatedly called for the adequacy of the current framework to be assessed. On 4 December 2018 the Council adopted conclusions on an Anti-Money Laundering action plan,4 inviting the Commission to conduct “a post-mortem review of the recent alleged money laundering cases involving EU credit institutions.”

While the review of cases has identified flaws in the anti-money laundering/countering the financing of terrorism systems across all the credit institutions included in our sample, not all shortcomings are identical and the joint analysis has resulted in the compilation of an indicative typology of failures, which is not necessarily common to all institutions analysed.

The analysis has identified four broad categories under which shortcomings may be grouped:

1) ineffective or lack of compliance with the legal requirements for anti-money laundering/countering the financing of terrorism systems and controls;

2) governance failures in relation to anti-money laundering/countering the financing of terrorism;

3) misalignments between risk appetite and risk management;

4) negligence of group anti-money laundering/countering the financing of terrorism policies.

Whereas some of the causes underlying the events analysed have already been or will shortly be addressed thanks to the recent changes in the regulatory framework, the analysis underlines a number of outstanding structural issues. The findings in this report are intended to inform the debate about how the anti-money laundering/countering the financing of terrorism framework could be further improved and to provide the basis for further discussions with relevant stakeholders. Some of the shortcomings highlighted in this Report are structural in their nature and have not yet been addressed. The different approaches to anti-money

Full report

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