The European Commission presented on Thursday 7 May its action plan to strengthen the fight against money laundering and terrorist financing (see EUROPE 12447/21). The document, which takes the form of a communication, confirms that the institution will present proposals for the establishment of a European supervisor in the first quarter of 2021, while remaining vague on its nature and functions.
“We are presenting different options for consultation. We may propose a new EU agency or add to the responsibilities of the European Banking Authority (EBA) depending on the feedback we get”, explained European Commission Vice-President Valdis Dombrovskis at a press conference.
The Commission is relying on the results of a public consultation launched on the same day, which is open until 29 July.
The communication therefore merely details the advantages and disadvantages of each option. While choosing the EBA would ensure continuity and speed, a reform of its governance would be necessary, and while the creation of a new body would allow maximum flexibility in its organisation and governance, it would be time-consuming and costly to set up, according to the Commission.
The reform of EBA governance is a major challenge for Mr Dombrovskis. “The refusal of the EBA to act on one of the biggest money laundering scandals in Europe, the Danske Bank scandal, was very disappointing and clearly shows that if we are to choose the EBA as the supervisory authority in the fight against money laundering, it must be accompanied by governance changes”, he said.
In fact, the Commission had already proposed such changes in the past, in the context of the revision of the three European Financial Supervisory Authorities, he recalled, lamenting the “limited appetite” of Member States for the proposal, which was eventually “toned down very substantially” (see EUROPE 12219/6).
The Commission is also launching several tracks with regard to the scope of such monitoring at the EU level. The body could, for example, be placed in charge of the financial and non-financial sector straightaway, or it could become so gradually, or it could cover only financial institutions, it explains. However, the latter option would leave “loopholes in the system”.
For the rest, the Action Plan does not add much that is new to the package of reports presented in July 2019, which identified the shortcomings of the European framework and already proposed paths to be followed (see EUROPE 12303/2).
It also confirms the Commission’s intention to present, in the first quarter of 2021, a proposal for a Regulation to transform part of the provisions of the fifth anti-money laundering Directive into directly applicable provisions and to extend the scope of European legislation to take account of technological innovation, particularly with regard to suppliers of crypto-assets (see EUROPE 12434/2).
It provides for the creation of a European coordination mechanism for national financial intelligence units, with a proposal forecast for the first quarter of 2021. Again, the Commission is leaving the door open for this mechanism to be managed by an existing EU agency or by a new specialised body.
The Commission also intends to publish guidelines on the role of public-private partnerships in the fight against money laundering in the first quarter of 2021.
See the action plan: https://bit.ly/2Lc10Pq
Revised methodology and update to the ‘black’ list
The Commission has also published its new methodology for drawing up the European ‘black’ list of non-Member States at high risk for money laundering, which it believes should prevent the list from being rejected again, as it was in 2019 by the EU Council (see EUROPE 12209/12) and in 2016 and 2017 by the European Parliament (see EUROPE 11790/5).
The final version does not contain any major changes compared to the methodology presented to Parliament in mid-April (see EUROPE 12467/19). In addition, it maintains the 12-month time limit for jurisdictions to apply the specific remedies agreed with the Commission before they are added to the list.
Thus, listing will only take place immediately if the non-Member State is uncooperative and refuses to make commitments, if there is a “higher threat level” justifying immediate action, or if it fails to implement remedial measures within the agreed time frame.
Pending the application of this revised methodology and the publication of a new list by the end of the year, the Commission also presented on Thursday a delegated regulation updating the EU ‘black’ list of high-risk non-Member States to bring it into line with the FATF list.
As expected (see EUROPE 12481/6), the list now includes 22 countries: North Korea, Iran, Afghanistan, Iraq, Syria, Uganda, Vanuatu, Yemen, Trinidad and Tobago, Pakistan, Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Panama, and Zimbabwe. Due to the Covid-19 pandemic, the addition of non-Member States to the list will only be effective from 1 October 2020.
The EU Council and Parliament now have a period of one month - which can be extended once - to approve or reject the list.
See the delegated regulations: https://bit.ly/3fwZbuK and the new methodology: https://bit.ly/2A8z8cX (Original version in French by Marion Fontana)