EU unveils new anti-money laundering package

Fresh proposals include creation of new Anti-Money Laundering Agency and single EU-wide rulebook

By Andreas Rogal

Andreas Rogal is a Brussels-based journalist and copy editor

21 Jul 2021

Despite ongoing efforts and many attempted fixes, the European Union’s anti-money laundering (AML) provisions haven’t quite delivered.

It was the enormous money laundering scandal involving various European banks that broke in 2019, which showed up Europe’s lamentable situation in the sharpest light.

When the current European Commission included the issue in its work programme, MEPs were quick to take the issue up, with MEPs Markus Ferber, Eero Heinäluoma and Billy Kelleher all writing on the topic for The Parliament Magazine, mapping the way, and pointing out weaknesses that they believe need to be addressed.

They agreed on the need for a fully harmonised EU framework - i.e., regulations rather than directives which have been implemented by some Member States either late, not yet or badly, leading to fragmentation and creating loopholes that can be exploited by criminals. And they called for an independent EU supervisory body to coordinate the national ones.

As European Commission Vice-President in charge of the issue, Valdis Dombrowskis took to the Berlaymont press room stage on Tuesday, it became clear that the Commission had listened.

“We have heard the wake-up calls, taken note and taken action. It is our responsibility to provide a safe and inclusive Europe where dirty money has no place to hide.”, said Dombrowskis as he announced the creation of an EU AML authority, the Anti-Money Laundering Agency (AMLA) - “not to replace national ones but to strengthen and coordinate them, so that “our EU AML rules [which] are now among the toughest in the world” are “applied consistently and closely supervised to make sure they really bite”.

Dombrowskis also announced that the Commission would “devise a single rulebook to clarify, strengthen and align AML obligations” across EU Member states, adding, “this is similar to what we did for banks after the 2008 financial crisis: creating single rulebooks and an EU supervisor.”

“We have heard the wake-up calls, taken note and taken action. It is our responsibility to provide a safe and inclusive Europe where dirty money has no place to hide” European Commission Executive Vice-President Valdis Dombrovskis

The new agency will have three main tasks: firstly, direct supervision of financial transactions of what is known as “obliged entities” operating across many EU Member States, secondly, close cooperation with and coordination of the national supervisors and thirdly, cooperation with national financial intelligence units, facilitating full and rapid information exchange.

So far, obliged entities are mostly financial market players such as banks, but the Commission now proposes to expand the field and include sectors that could be involved in aiding money laundering like lawyers, estate agents, antique and art dealers and accountants, at least in a corporate context.

Asked at the press conference about the powers of the new AMLA vis-a-vis national authorities, Dombrovskis confirmed that the agency would be able to “take over a national agency” if it failed to react to a serious risk or presented one itself.

Markus Ferber was quick to comment on the proposals in a press statement on Tuesday, saying,

“It will be key that the new Anti-Money Laundering Authority will actually be in charge of all relevant institutions and will be truly independent from its national counterparts.”

“The biggest risk is that we are adding just one additional layer of complexity and creating a new conflict of competences. To avoid that, it must be crystal clear that the new Authority firmly calls the shots for high-risk entities"

Mairead McGuinnes, the Commissioner for Financial services, financial stability and Capital Markets Union called the package a “game changer”, not only in tackling money laundering but also the “appalling crimes” that are behind the dirty money raised.

That was why “money laundering poses a clear and present threat to citizens, democratic institutions, and the financial system The scale of the problem cannot be underestimated and the loopholes that criminals can exploit need to be closed.”

"Today's package significantly ramps up our efforts to stop dirty money being washed through the financial system. We are increasing coordination and cooperation between authorities in member states, and creating a new EU AML authority. These measures will help us protect the integrity of the financial system and the single market.”

“Money laundering poses a clear and present threat to citizens, democratic institutions, and the financial system The scale of the problem cannot be underestimated and the loopholes that criminals can exploit need to be closed” Mairead McGuinness, Commissioner responsible for financial services, financial stability and Capital Markets Union

One of the loopholes is the virtual lack of EU law covering transactions in crypto currencies, which would now come under the same obligations of sender and beneficiary declaration as ‘normal’ transactions.

This aspect found the support of Spanish MEP Jonás Fernández, the S&D Group’s spokesperson for economic affairs, who said, “The new proposals on crypto-assets in particular are a big step forward in a largely unregulated area.”

“With rules making the transfer of virtual assets more transparent, we will be able to stop the crypto-currency market from becoming a hotbed for criminals to operate and profit from illicit money flows taking place in the shadows.”

Among the other proposals of the package is a more differentiated and tailored approach to countries outside the EU, with the help of a list of so-called “grey countries” - those that pose risks but are willing to cooperate to address them, and of “black” ones, posing risks bit unwilling to cooperate, leading to appropriate measures towards them.

Interestingly, the most controversial proposal, especially for the European Council, could turn out to be the attempt to introduce an EU-wide minimum cap on cash transfers. Some Member States have very low caps already - €500 in the case of Greece - others, like Germany, have no cap at all.

The Commission is proposing a cap of €10000 (with some possible exemptions on peer-to-peer transactions like used car sales, for example). Commissioner McGuinness said she was expecting “an interesting conversation” on the issue.

For German Greens/EFA MEP Sven Giegold, the proposals are “a major step forward against money laundering”, sending a “powerful message to organised financial crime.”

While equally commending the creation of a dedicated EU agency and a Single Rulebook comparable to the one created for financial services after the Euro crisis, he called on the Commission to also turn to criminal matters arguing that “the seizing of assets and prosecution of criminals is still happening much too slowly. As its next big step in the fight against organised crime and money laundering, the Commission now has to propose a European Criminal Investigation Office.”

In the meantime - legislating for this package will take time even if prioritised, with the AMLA expected to be operational in 2024, and its direct supervision work only to begin two years later - Dombrowskis will, as he put it, “insist on full implementation of existing legislation by the Member States.”

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