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Money Laundering and Terrorist Financing: The Council’s Action Plan 2018

  • United Kingdom
  • Financial services disputes and investigations

11-12-2018

The Economic and Financial Affairs Council of the European Union (the “Council”) has continued to strengthen the anti-money laundering and terrorist financing framework, with the recent introduction of the Fifth and Sixth Anti-Money Laundering Directives. The European Commission has also called for a strengthened framework for the prudential and anti-money laundering supervision of financial institutions.

On 28 November 2018, following a number of instances of alleged money laundering involving EU banks, the Council published draft conclusions on an anti-money laundering action plan, which focuses on strengthening the current framework and improving the exchange of information and collaboration between prudential and anti-money laundering / countering financing of terrorism (“AML/CFT”) supervisory authorities. The conclusions set out a number of short-term non-legislative actions that will be carried out over the course of the next year.

The objectives and associated actions are:

1)   Identify the factors that have contributed to the recent money laundering cases in EU banks to better inform possible additional actions in the medium and long term

  • Action: conduct a review of the recent alleged money laundering cases involving EU banks (in Denmark, Estonia, Latvia, Luxembourg, Malta, Spain, the Netherlands, Britain and Cyprus).

2)   Map relevant money laundering and terrorist financing risks and the best prudential supervisory practices to address them

  • Action: identify the key areas of money laundering and terrorist financing that need closer scrutiny by prudential supervisors and integrate the best practices into prudential supervision. 

3)   Enhance supervisory convergence and better take into account AML/CFT aspects in the prudential supervisory process

  • Action: specify how supervisors should take into account money laundering and terrorist financing risks in the context of the Supervisory Review and Evaluation Process.

4)   Ensure effective cooperation between prudential and AML/CTF supervisors

  • Action: following from the Fifth Anti-Money Laundering Directive, establish adequate channels for information exchange and communication between the supervisors and with the European Central Bank; map relevant competent AML/CFT supervisors as counterparties of prudential supervisors in case of groups operating cross-border; send a clear signal to the industry that AML/CFT supervisors and prudential supervisors communicate and cooperate; and conclude a broad multilateral Memorandum of Understanding with all relevant AML/CFT authorities.

5)   Clarify aspects related to the withdrawal of a bank’s authorisation in case of serious breaches

  • Action: ensure there is a uniform interpretation of what constitutes a serious breach in the Capital Requirements Directive; clarify the degree of discretion given to prudential supervisors and the criteria for withdrawal of authorisation alongside consistent consideration of the consequences of licence withdrawal; and identify the measures available to prudential authorities in addressing prudential concerns.

6)   Improve supervision and exchange of information between the relevant authorities

  • Action: expand the Risk-Based Supervision Guidelines to include guidance on best practice and specify common procedures and methodologies for the supervision and assessment of credit and financial institutions’ compliance; finalise the guidelines on cooperation and information exchange among AML/CFT supervisors of credit and financing institutions and prudential supervisors; follow up on the recommendations proposed by the Commission and finalise the joint opinion pursuant to Article 6(5) of the Anti-Money Laundering Directive. 

7)   Share best practices and find grounds for convergence among national authorities

  • Action: develop secondment programmes to allow regular staff exchanges and mentoring.

8)   Improve the European supervisory authorities’ capacity to make better use of existing supervisory powers and tools

  • Action: undertake stringent reviews of the activities of supervisory authorities; increase the number of AML focused training courses for supervisors; continually monitor the need to investigate breaches; make great use of the Anti-Money Laundering Committee; promote the use of existing prudential supervisory colleges to improve coordination and exchange; and develop a strategy for interaction with third country AML/CFT authorities.

Commentary: The fact that one of the key actions above is a 'post-mortem' review of the recent alleged money laundering cases involving EU banks indicates a certain level of discomfort as to the frequency which these cases seem to be arising and the seriousness of the conduct involved. Whilst a focus on collaboration and information-sharing is a prominent feature both of this new action plan, and in a wider context in MLD5, it remains to be seen whether this will actually result in fewer money laundering cases, or indeed earlier detection. The European Commission has been invited to make proposals for longer-term actions, although no indication has yet been provided as to when such reforms will be considered. Further detail will be required  it remains to be seen how these commendable ambitions will translate into meaningful action.

For more information contact:

Ruth Paley
Principal Associate
ruthpaley@eversheds-sutherland.com
+44 20 7919 0527

Ellie Legg
Trainee Solicitor
ellielegg@eversheds-sutherland.com
+44 20 7919 0962

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