Insurance Europe has today published its response to a consultation by the European Commission on its action plan for a comprehensive EU policy on preventing money laundering (ML) and terrorist financing (TF).

Insurance Europe warned that the action plan should avoid being bank centric and must take account of the fact that, while the banking sector is clearly vulnerable to ML/TF, insurers’ business models and products do not lend themselves easily to such operations. In fact, this has been confirmed by the Commission’s own assessments.

However, given that the mandate to supervise the whole financial sector –including insurers – was recently given to the European Banking Authority (EBA), there is a real risk that the EBA will enforce a banking-related supervisory approach across all sectors which ignores the vast differences between financial sectors in their exposure to ML/TF risks. This risk will remain even if a new, centralised supervisor is set up to take over this work from the EBA.

Moreover, the allocation of cross-sector jurisdiction to the EBA (or a new centralised authority) challenges the foundation of the European system of financial supervision – which is based on a clear separation of tasks and competences between the European Supervisory Authorities.