EU takes first steps to establish anti-money-laundering watchdog

The move follows a series of scandals about dirty money passing through European banks

Kaja Tael, permanent representative to the EU from Estonia

The Council of the European Union on 5 December backed plans for creating an independent agency to combat money laundering. In a statement, finance ministers asked for more “effective cooperation” among authorities, and urged the Commission to consider the advantages and disadvantages of “conferring certain supervisory responsibilities and powers to an EU body”.

The push comes amid a wave of allegations of weak internal controls at some of the Europe’s largest banks. The Union’s largest money-laundering scandal happened last year, when it was revealed €200bn in suspicious payments were made through Danske Bank’s Estonian branch from 2007 to 2015, much of it from Russia.

Last year’s reform of the anti-money-laundering rules has proven to be insufficient with the emerging of many new scandals. In a report published in July this year, the European Commission  said that fragmentation in the way EU Members States supervise anti-money-laundering compliance has left the financial system vulnerable to criminal activity.

Finance ministers from several EU countries, including Germany, France and Spain, thus insisted that EU would benefit from a new body that would promote information-sharing and provide a more independent approach. Yet, during a meeting Thursday, representatives from several countries raised concerns about proposals that could limit the power of national supervisors.

“National authorities have a lot to offer - they have the local know-how, the ability to react quickly,” said Kaja Tael, permanent representative to the EU from Estonia. “But the international cooperation needs to be improved.”

Meanwhile, Joerg Kukies, state secretary at Germany’s Federal Ministry of Finance, expressed support for a new anti-money-laundering supervisor, as well as surprise over the optimism expressed by other attendees regarding the strength of national-level supervision.

During the same meeting, EU ministers also said they want to consider EU rules to regulate crypto-assets and stablecoins, amid bloc’s tough line on Facebook's crypto currency Libra as part of a more global.

“No global stablecoin arrangement should begin operation in the European Union until the legal, regulatory and oversight challenges and risks have been adequately identified and addressed,” the ministers said in a joint statement.

As stated by the EU Finance Commissioner Valdis Dombrovskis in a public session of their meeting in Brussels, the Commission is working on such a regulation, as well.

In the meantime, ministers praised the European Central Bank’swork on a public digital currency, which could represent an alternative to private initiatives. In a document presented to finance ministers, the ECB said a public digital currency could be necessary if payments within Europe remained too expensive. Its possible adoption would be accelerated by signs of  lower cash usage, the ECB said, warning however that the impact of such an initiative on the financial system could be very large, and therefore would need to be assessed carefully.

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