MEPs call for creation of EU financial crimes authority in wake of FinCEN Files scandal

European Commission pledges to step up fight against money laundering.
Money Laundering

By Martin Banks

Martin Banks is a senior reporter at the Parliament Magazine

09 Oct 2020

European Commission Vice-President Dubravka Šuica has pledged to step up the fight against money laundering, saying that planned new legislation in the New Year aims to address “shortcomings” in existing legislation.

Šuica, responsible for the democracy and demography portfolio in the Commission, told MEPs, “we aim to ensure that dirty money has no place to hide in the EU. We must close the door on dirty money.”

She was speaking at the Parliament’s Plenary on Thursday in a debate with members on recent money laundering revelations about how the world’s biggest banks moved vast amounts of tainted funds, feeding into global financial corruption.

Several MEPs called for tougher enforcement - by both Member States and the EU- of existing anti money laundering rules and the creation of a new authority in Europe modelled on FinCEN, the US Financial Crimes Enforcement Network, which is part of the US Treasury and is charged with combating financial crime.

Leaked documents obtained by FinCEN, involving about $2tn in transactions, revealed how some of the world's biggest banks have allowed criminals to move dirty money around the world. The FinCEN are the latest in a string of leaks over the past five years that have exposed secret deals, money laundering and financial crime.

The files were leaked to Buzzfeed News and shared with a group that brings together investigative journalists from around the world, which distributed them to 108 news organisations in 88 countries.

“These files show the ongoing challenges we face in preventing criminals from using financial systems to launder dirty money. I want to tell you that we are up to this challenge and, early in 2021, will propose a new and ambitious anti-money laundering package” European Commission Vice-President for Democracy and Demography Dubravka Šuica

In the hour-long parliamentary debate, Šuica said she agreed with MEPs on the need to address shortcomings in existing anti-money laundering rules, saying this is a “top priority” for the commission.

She warned the EU would open infringement proceedings against Member States that do not transpose the existing anti-money laundering directive and added, “These files show the ongoing challenges we face in preventing criminals from using financial systems to launder dirty money.”

She added, “I want to tell you that we are up to this challenge and, early in 2021, will propose a new and ambitious anti-money laundering package.”

Several members voiced particular concern that the Cayman Islands had been removed from the EU’s list of tax havens, a move the EU said it had taken after it passed the necessary reforms to improve its tax-policy framework.

There was also concern that, so far, only nine Member States have fully implemented the EU anti-money laundering directive.

On this, Šuica said that a questionnaire had been sent to Member States, asking which are implementing the money laundering directive.

“FinCEN has put its finger on the wound and a similar authority here would put Europe on a par with the US”  German Greens/EFA Group MEP Sven Giegold

In the debate, German EPP Group member Markus Ferber said, “These files show that nothing had been done despite the anti-money laundering directive. Money laundering has no place in Europe but, clearly, the authorities are unable to take effective steps against companies.”

Finnish Socialist Group member Eero Heinaluoma said, “The existing system does not work because it is full of holes and it was left to journalists to expose wrongdoing.”

Romanian Renew Europe Group deputy Ramona Strugariu asked, “How is it possible that such huge amounts of dirty money are being transferred? This shows we need a truly effective supervisory body and better coordination with member states if we are to truly tackle this issue.”

Joachim Kuhs, an ID Group member, said, “There are many rules on tackling dirty money but they are not being implemented. Greed is behind this.”

Sven Giegold, a German Greens/EFA Group MEP, said the files had a “surprising positive effect because we at least all now know what FinCEN is. It looks at transactions in the US and worldwide and we need this type of authority in Europe that can intervene and tackle money laundering.”

“FinCEN has put its finger on the wound and a similar authority here would put Europe on a par with the US.”

 “The files are yet another example of how deep a problem money laundering and financial corruption is, but how many revelations does it need before we shut off the tap to these banks and companies? We need an authority like FinCEN instead of just guidelines” Austrian EPP Group MEP Othmar Karas

Jorge Buxade Villalba, an ECR Group member from Spain, said, “Gibraltar is notorious for money laundering and has been for a long time. This is obscene but, instead of fighting tooth and nail against money laundering, we are using taxpayers’ money to finance multinationals.”

Manon Aubry, a French GUE/NGL Group deputy, said, “This is a story of large banks and tax havens who think they are above the law. The work of investigative reporters exposed this scandal and it is not a one off. How long do we have to put up with crocodile tears of our leaders while they do nothing about it?”

Italian non attached MEP Laura Ferrara said release of the files exposed a “huge dark side of the financial system” and the role in this of off-shore companies and tax havens.

She added, “We have the anti-money laundering directive but there is still a lot to do.”

Othmar Karas, an EPP member from Austria, told the debate, “The files are yet another example of how deep a problem money laundering and financial corruption is, but how many revelations does it need before we shut off the tap to these banks and companies? We need an authority like FinCEN instead of just guidelines.”

Paul Tang, a Dutch Socialist MEP, said “These transactions are used by the rich and criminals but it is clear that not enough action has been taken so far in the EU. We need tougher penalties and to make banks act in their roles as gatekeepers. They need to know who their customers are and when suspicious transactions are being made.”

Billy Kelleher, an Irish Renew Europe member, said, “You can go to any country in Europe and see examples of dirty money being laundered. We need proper enforcement.”

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