On Wednesday 4 November, EU Finance Ministers will discuss by videoconference several draft EU Council conclusions on various topics such as the fight against money laundering, the ‘European Semester’ and statistics. They will also discuss with the Commission a possible increase in non-performing loans in the EU banking sector following the Covid-19 pandemic.
Ministers will first discuss, in a public session, draft EU Council conclusions on the Commission’s action plan to strengthen the fight against money laundering and terrorist financing (see EUROPE 12482/8). On Friday 30 October, a European diplomat said he expected “broad support” for the text, which should be adopted, after the videoconference, by written procedure.
The text in question, which dates from 22 October and of which EUROPE received a copy, gives more details of the EU Council’s view on the proposal that the Commission should present in 2021 to establish a European supervisor, compared with an earlier September version (see EUROPE 12563/23).
Member States should support a risk-based approach and assignment to the future supervisor of the task of supervising entities posing a high risk of money laundering or terrorist financing.
According to the text, the EU supervisor could also “step in” from a national supervisory authority in “clearly defined and exceptional situations on the basis of objective and transparent criteria, in cases where the national supervisor is unable to enforce compliance or cannot ensure adequate supervision”.
To determine the degree of risk of entities, the text proposes as assessment criteria to take into account the risk arising from the nature of the entity’s activities, in particular its clientele, products, distribution channels or geographical exposure, as well as cross-border aspects and the challenges posed by the digitisation of financial services with regard to money laundering.
The Commission should also, according to the text, propose a gradual approach to the scope of supervision, starting with a relatively small number of obliged entities at risk in the financial sector at the outset - including bureaux de change, credit, payment and Emoney institutions and other virtual asset service providers - and gradually increasing the number of obliged entities.
It should be noted that the text also recognises the importance of the Commission’s ongoing work with regard to citizenship-by-investment programmes and the risks they may pose to money laundering (see EUROPE 12585/12).
Non-performing loans. Ministers will also discuss the likely wave of new bank loans that will become non-performing loans (NPLs) as a result of the economic crisis caused by the Covid-19 pandemic.
The Commission will take stock of the measures it has implemented so far to realise the EU Council Action Plan 2017 on NPLs (see EUROPE 11827/1) and will present to Ministers the key elements of its forthcoming NPL Action Plan, expected in December.
European Semester. The German Presidency of the EU Council will then present two texts of EU Council conclusions on the European Semester, which should not give rise to highly controversial debates, according to the same European diplomat.
It will first present a text which broadly agrees with the main conclusions of the European Court of Auditors’ Special Report on the European Semester 2020, in particular that the implementation of the relevant country-specific recommendations has been insufficient and should be strengthened.
Ministers will then exchange views on a draft set of conclusions on the 2021 annual strategy for sustainable growth. The text welcomes the fact that the strategy is anchored in the EU’s objective of achieving sustainable competitiveness and recognises the need to temporarily adapt the European Semester to ensure coherent and effective implementation of the Recovery and Resilience Facility. It encourages Member States to pursue a coherent package of key reforms and investments by tackling national structural problems.
At the same time, the EU Council stresses that the surveillance of structural policies and horizontal discussions should continue and calls for a return to a fully-fledged European Semester process as soon as possible.
European Fiscal Board. In addition, the Chairman of the European Fiscal Board, Niels Thygesen, will present to Ministers the Committee’s 2020 annual report (see EUROPE 12585/22), which also concludes that the Covid-19 crisis has shown the costs inherent in the absence of a permanent central fiscal capacity capable of being deployed rapidly to deal with an exogenous macroeconomic shock.
Statistics. Finally, the Presidency will present EU Council conclusions on statistics, taking stock of progress and providing guidance for further work in this area. The text should be adopted by written procedure after the videoconference, without further discussion.
Taxation. Under the item “other business”, the German Presidency is expected to press the Ministers to reach an early agreement on the Commission’s proposal (DAC 7) to amend the EU Council Directive (2011/16/EU) on administrative cooperation in the field of taxation (DAC) in order to extend the automatic exchange of information to digital platforms such as Uber and Airbnb (see EUROPE 12528/3).
As a reminder, the EU Council had already set out its expectations regarding this amendment in conclusions (see EUROPE 12498/34) adopted in June. (Original version in French by Marion Fontana)