A summary of the joint debate is now available.
EP LIBE – 7 November 2019
Joint debate with the ECON on EU’s Anti-Money Laundering Directive and related reports
LIBE Chair Juan Fernando López Aguilar (S&D, ES)
- they met to address the Communication from the Commission on better implementation of the EU’s anti-money laundering (AML) and countering the financing of terrorism framework, and several reports from the Commission on AML and terrorism, cooperation between Financial Intelligence Units, interconnection of national centralised automated mechanisms of the Member States (MS) on bank accounts and recent alleged money laundering cases involving EU credit institutions;
- he pointed out that even after the expiry of the transposition deadline of the 4th AML Directive, there had been several infringements procedures against relevant MS;
- he believed that although the deadline for the transposition of the 5th AML Directive was in January 2020, there will still be lack of implementation in a number of MS;
- to further harmonise the framework the European Commission had prospered to:
- transform the AML Directive into a Regulation;
- confer specific AML supervisory tasks to a new EU body.
- he also recalled that in September 2019 the European Parliament (EP) had adopted a resolution on the state of the implication of the AML legislation, in which it called on the Commission to assess any future revision of AML legislation.
Despina Vassiliadou, Deputy Head of the Financial Crime Unit, DG JUST
- the fight against money-laundering and terrorism had been a priority for the Juncker Commission and it would be also for the incoming one;
- in July 2019, the Commission issued the previously mentioned four reports;
- regarding the supranational risk assessment, she said that in ML they had a risk-based approach, which meant that everything started with understanding of certain products and sectors and subsequently taking measures to mitigate those risks. As those risks change with time, the Commission was doing the exercises every two years and was trying to predict the risks in the whole internal market;
- the first exercise was in 2017 when they assessed 40 products, and the second one in July 2019 which assessed 47 products. The assessed risks concerned crypto assets, investment citizenship schemes from professional football, free ports etc;
- the Commission evaluated the risks to ML and to terrorism financing separately;
- they concluded that the risks had expanded in several sectors, not just in the banking one. The risks came from financial and non financial initiations, such as lawyers, accountants, notaries and gambling sector;
- they also assessed the horizontal vulnerabilities, meaning those risks that were found in various sectors, and they found that the biggest ones were:
- the anonymity of transactions;
- the identification of beneficial ownership;
- the functioning of authorities responsible for AML and weaknesses in supervision and the Financial Intelligence Units (FIUs).
- the second and the third reports were related to weaknesses in supervision and obstacles in cooperation between Financial Intelligence Units (FIUs). In that regard, they had found several shortcomings:
- lack of correct application and implementation of the Directive;
- lack of information sharing between FIUs;
- lack of feedback to obliged entities;
- timelines to respond in MS;
- IT problems and malfunctioning of systems;
- lack of sufficient harmonisation for the activities of FIUs.
- among the structural issues, they identified the lack of legal powers of the FIUs platform to have legally binding rules;
- on recent ML cases, she said that the Commission had choose 10 cases: ABLV Bank, Danske Bank, Deutsche Bank, ING, FBME Bank, Nordea, Pilatus Bank, Versobank, Société Générale and SataBank as they were prominent in the media and were recent;
- they did not only look at the credit institutions, but also at the responsible supervisory authorities;
- the problems they found were related to lack of compliance, inadequate customer due diligence, failure to report to FIUs, governance, limited internal investigation, senior management responsibilities, business models and competent authorities;
- with regard to supervisory authorities, one of the main issues were limited resources. For example, they found countries where only two people were responsible for the supervision of the whole financial sector of the country;
- other issues were related to insufficient expertise and lack of decisive fines;
- on the report on interconnection of national centralised automated mechanisms (central registries or central electronic data retrieval systems) of the MS on bank accounts, she stated that the Commission lacked the legal basis to connect the mechanisms, although the interconnection was technically feasible.
- they arrived to a conclusion that they had many gaps, but they also had new laws and the MS were alerted and started taking positive steps. However, there were still gaps in the legislation as they needed more detailed rules regarding supervisors, FIUs and obligations on obliged entities;
- they also saw the need for some tasks being given to central EU level.
Emil Radev (EPP, BG)
- stated that the new provisions of the 5th AML Directive updated the EU legislation in line with the EU technological developments but that was not sufficient;
- pointed out that it was of paramount importance for all EU MS to transpose and implement the EU legislation directly. Any gaps and loopholes in the implementation of the existing AML framework by a great number of states exposed the EU to threats by criminals and terrorists;
- asked if it was appropriate to consider a uniformed European approach;
- wanted to know if the Commission was planning any updating of the legislation concerning anti-money laundering and countering terrorism financing;
- asked what the measures that the Commission intended to propose to strengthen the Coordination and support mechanism;
- pointed out the example of the Pilatus Bank in Malta and asked what lessons could be drawn from that case.
Birgit Sippel (S&D, DE)
- stated that the Commission’s communication on implementation on anti-money laundering network was really alarming. All 28 MS had received infringement procedures concerning the implementation of the 4th AML Directive which had had a transposition deadline in June 2017;
- asked if the situation since June had improved and if there were more MS transposing the directive correctly;
- on the establishment of a European FIU, Sippel wanted to have more details if there was really a more positive response from the Council to that idea now when was clear that the current cooperation was not working;
- raised the matter of the announcement of the move of the unit dealing with anti-money laundering from DG JUST to DG FISMA. She asked if the Commission could reassure the LIBE Committee that the crucial, criminal justice element of the anti-money laundering work would not be lost.
Sophie in’t Veld (RE, NL)
- in terms of the gaps in legislation, In’t Veld asked why the Commission had not made such a proposal. She suggested that the reason might be linked to the fact that MS still considered anything to do with money, banks, taxation as their exclusive competence;
- asked if the Commission would consider proposing a single supervisor;
- wanted to know how the Commission saw the role of the European Banking Authority and asked if their work was enough;
- asked if the EU could pass all the legislation and set up supervisory bodies only to roll out the red carpet for criminal money and money launderers;
- raised the question if the Commission was too timid in that situation pointing out that it should impose a ban on golden passports.
Saskia Bricmont (Greens/EFA, BE)
- welcomed the conclusions made in the communication and the path taken by the EC on those files;
- on behalf of her group, Bricmont welcomed the will to transform the AML Directive into a Regulation and asked what areas of the text the Commission was specifically thinking of;
- stated that the Parliament had taken a firm stance against the practice of golden visas and asked if the Commission taught of banning such practise in the EU;
- asked if the Commission believed national register for companies and trust would be ready on time;
- asked about the timeline of the work of the Council of Europe which was contracted to conduct a study on the practical implementation;
- wanted to know when the Commission planned to work on a legislative tool to ease interconnections between the MS.
Assita Kanko (ECR, BE)
- stated that the fight against money laundering and terrorism financing was a continuous and uphill task. It required regulatory vision and updates to EU legislation in order to respond to new technology and new criminal tactics;
- pointed out that solving that issue did not necessarily require new regulation which could take years to negotiate;
- stated that what was needed was increased EU support and training for MS and responsible authorities how to enact the rules adopted;
- pointed out that the new Commission was structured in such a way that similar issues and pieces of legislation were divided by many DGs and commissioners’ portfolios;
- asked how the Commission intended to ensure good cooperation and communication under that framework. Wanted to know what are the practical and day-to-day issues that prevented MS’ authorities from effectively exchanging data between national systems;
- wanted to know what forum was there right now for the exchange of best practices on anti-money laundering and how that could be improved in the years ahead.
Enikő Győri (EPP, HU)
- stated that practically there was very few evidence on how that new piece of legislation would work in practise and what kind of impact it would have;
- pointed out that not always having newer instruments and newer EU institutions was the most efficient way to fight something that was clearly rejected;
- said that trust and cooperation in national institutions were important;
- said that new EU institutions could put the financial institutions in Europe into a difficult situation;
- better coordination between the existing actors was preferable.
- regarding the Pilatus Bank, Metsola pointed out that what was seen on the ground was a situation where everything looked normal on paper. It turned out that that was a shadow bank set up to protect selected people from scrutiny;
- in terms of the above-mentioned, Metsola asked what happens when all laws were in place, all enforcement agencies had been notified but then no action was actually taken;
- on passports, she asked when there was no genuine link to the Union or MS by an individual purchasing that passport what could the Commission do to stop such schemes.
Eero Heinäluoma (S&D, FI)
- questioned if working on directives on money laundering was right as people were more demanding to the same rules in every country;
- asked what the opinion of the Commission was on that matter. He wanted to know if there should be more binding legislation and the same rules in every country;
- was wondering if it was possible for the EU to do the work without having European authority that would ensure every MS was doing their job.
Antony Hook (RE, UK)
- on money laundering, Hook wanted to know if there was an area which had been overlooked. Political organisations for example linked to other work EU was doing on foreign interference in our democracy. In the UK, he pointed out, money laundering rules did not apply to political organisations;
- he supported having the same rules across Europe because that also related to fairness to people running small businesses.
Despina Vassiliadou, Deputy Head of the Financial Crime Unit, DG JUST
- on the question if there had been progress since June, the Commission had closed infringements for 4 countries and planned to do so for another 4;
- on the question on the 5th Directive being transposed on time, 6 MS had already notified its transposition ahead of schedule. The Commission hoped that by Spring they would receive all the notifications they needed;
- regarding the timeline on the Council of Europe’s study, their work would continue until 2021. The results would be published in 2022;
- on the remarks of assisting MS in carrying out their tasks, the Commission had done training for notaries across Europe and this year it would do trainings for lawyers;
- the EC was looking at supporting MS in the implementation of the Directive. There was a body in the Commission SRSS which provided structural support for MS in implementing the various rules;
- on the question of the obstacles to exchange of information between various authorities, they said that there would not be that many obstacles for cooperation following the implementation of the 5th Directive and other directives;
- on the question of a single supervisor, they stated that that was one of the issues the Commission would try to look at;
- on the question of Pilatus Bank, the EBA had found that the Maltese Financial Intelligence Unit had breached EU law through no action;
- on the golden visas, they said that there might me legal obstacles for the Commission regulating or banning that field. There was, however, a requirement in the Money Laundering Directive that where transactions related to applicants for golden visas or citizenship schemes, they should be treated as a high-risk situation and there should be enhanced checks on them;
- on the question of the parts of the directive that could be turned into a regulation, the Commission was aware of the great burden on the private sector, so it would look at doing more harmonisation at EU level.