Member States' ambassadors to the EU (Coreper) are expected to reach political agreement in principle on Wednesday 19 December on the new anti-money laundering powers conferred on the European Banking Authority (EBA).
As a reminder, the European Commission proposed these measures last September (see EUROPE 12094), following recent scandals involving several European banking groups in Malta, Latvia and Denmark.
In order to move forward quickly, the Council decided to separate this dossier from the broader reform of the three financial European Supervisory Authorities (ESA), which was put on the table in September 2017 (see EUROPE 11864), and to which this proposal was added.
The compromise text of the Austrian Presidency of the Council of the EU, consulted by EUROPE, retains the main elements of the initial legislative proposal, in particular the objective of concentrating the powers and resources to combat money laundering, currently dispersed between the three ESAs, within the European Banking Authority.
It also maintains the possibility for the EBA to ask national anti-money laundering supervisors to investigate alleged material offences and to send a decision directly to a financial sector operator as a last resort. The deadline for the national authority to inform the EBA of the measures taken to comply with its request is extended to 15 working days, compared to the 10 days proposed by the Commission.
However, reading between the lines, several deletions and modifications of the text suggest that the Council is about to adopt a somewhat watered down text.
While the Commission's text provided for powers to "combat" the fight against money laundering, the Council's text provided for powers to "prevent" this phenomenon, by involving the competent national authorities.
In addition, the Austrian draft compromise more strictly regulates the collection by the EBA of relevant information on material weaknesses in the banking sector that may lead to risks of money laundering or terrorist financing.
‘Material weaknesses’ are defined in the text as: - a violation or potential violation of EU or national laws transposing them; - inappropriate or ineffective application of these rights; or - inappropriate or ineffective application of domestic procedures to comply with these rights.
In a new article, the Council also asks the Commission to carry out a full evaluation of the implementation, functioning and effectiveness, as well as the practice of the new tasks entrusted to the EBA and to present it to the co-legislators by 11 January 2020.
Above all, the text specifies that, until such an assessment is made, the new anti-money laundering powers conferred on the EBA should be considered as "an interim solution".
The text also seeks to maintain a certain balance between the three ESAs. It specifies, for example, that the EBA will only take a decision with the prior consent of the European Insurance and Occupational Pensions Authority (EIOPA) or the European Securities and Markets Authority (ESMA), when an individual decision concerns financial institutions or competent authorities within the scope of these two authorities.
The Council also considers that representatives of EIOPA and ESMA should participate in the meetings of the new ad hoc committee established within the EBA to prepare decisions relating to measures to combat money laundering, but not have the right to vote. Both authorities should also be able to submit written comments on the draft decisions at any time. (Original version in French by Marion Fontana)