9/17/18 - Promontory Currents: Important Changes to the European Money-Laundering and Financial-Crime Landscape
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9/17/18 - Promontory Currents: Important Changes to the European Money-Laundering and Financial-Crime Landscape

By David Pinto-Duschinsky

On Wednesday, the European Commission announced a series of reforms that show how European money-laundering and financial-crime supervision is developing in the face of emerging scandals and institutional weaknesses in a number of European Union jurisdictions, including Latvia, Malta, Estonia, and Denmark.

These reforms will strengthen the role of EU institutions in fighting financial crime and portend a more rigorous (and potentially more onerous) money-laundering and financial-crime regime. They will transform the role of European institutions, in particular the European Banking Authority, in overseeing anti-money-laundering supervision.

In the announcement, the commission proposes to give the EBA a more explicit and comprehensive mandate to ensure that risks of money laundering and terrorist financing in the EU’s financial system are effectively and consistently incorporated into the supervisory strategies and practices of relevant authorities.

The commission’s announcement states that under the terms of the EBA’s amended mandate, the EBA will:

  • “Ensure that breaches of [AML] rules are consistently investigated”
  • “Provide that national [AML] supervisors comply with EU rules and cooperate properly with prudential supervisors”
  • “Enhance the quality of supervision through common standards, periodic reviews of national supervisory authorities and risk assessments”
  • “Enable the collection of information on [AML] risks and trends and fostering exchange of such information between national supervisory authorities”
  • “Facilitate cooperation with non-EU countries on cross-border cases”
  • “Establish a new permanent committee that brings together national [AML] supervisory authorities”

We expect that these changes reflect the start of the process and that additional changes are likely, driving a further tightening of the overall supervisory and enforcement regime.

Institutions will need to move quickly to position themselves to be ahead of the risks from the rising trajectory of forthcoming changes. Our work across the EU suggests that many institutions, despite considerable commitment to combatting financial crime and significant investment in financial-crime compliance, continue to exhibit vulnerabilities that could be exposed under a stricter regime.

We believe, however, that institutions can address these vulnerabilities through a combination of short-term actions and long-term initiatives. But it will be important to start taking steps now to prepare for the reforms ahead. Change is coming.


David Pinto-Duschinsky is a Managing Director in Promontory’s London office.