Brussels has set its sights on dirty money.
Photo source: POLITICO.COM/ Olivier Hoslet/ EPA
The European Commission on Tuesday unveiled a massive package of anti-money laundering initiatives to drive dirty money out of the bloc after repeated failures in supervision.
The crowning feature of the four-pronged package is a plan to introduce a new EU anti-money laundering authority, known as AMLA. The new EU agency should be set up within the next three years and begin direct supervision by 2026, complete with the power to issue fines worth millions of euros.
But some lawmakers and think-tankers warn that the package might not be enough to snuff out illicit financiers and suspicious activity amounting to some €160 billion across the bloc. Here are five reasons why money launders will likely be shrugging their shoulders over Brussels’ initiatives — for now.
1. AMLA won’t be built in a day
Tuesday’s package is ambitious. The new agency is set to hire 250 people to directly supervise the bloc’s riskiest financial institutions with a yearly budget of €45 million. But AMLA won’t be built in a day. The watchdog is set to only begin its direct supervisory duties from early 2026. That’s almost five years of the status quo, which has proved to be ineffective at tackling dirty money.“
2. The bloc still has blind spots
The Commission proposed a single rulebook Tuesday that will harmonize the bloc’s rules, which AMLA will police, to remedy the situation. Legislative negotiations over uniform rules can take years, however, and there are still some capitals that have yet to introduce the EU’s existing rules. Brussels has been cracking down on the bloc’s stragglers in recent years with threats of courts and penalties. All this takes time, too.
3. Other sectors remain vulnerable
“No EU authority can supervise all anti-money laundering law enforcers, especially in the nonfinancial sector such as trade in goods, real estate, lawyers and gambling,” German Green EU lawmaker Sven Giegold said. “Therefore, it is still up to the member states.”
4. The darknet can bypass fintech rules
Finance is becoming increasingly digital. So, it’s only natural that part of the Commission’s AML package would include a bill that targets financial technology, too. The bill aims to introduce disclosure requirements for the buying and selling of crypto assets within the EU. That means any company or financial firm in the EU that transfers a digital asset in or out of the bloc will have to provide details on who’s moving the money around.
5. Power politics — what else?
Even if EU legislators are quick to agree on common rules and the makeup of AMLA, there’s a risk that location politics could delay the watchdog’s planned introduction for 2024. You can’t put a spade in the ground if capitals can’t agree on where to start building. EU agencies come with influence and power while boosting national economies with their well-paid employees. Capitals have been willing to fight tooth and nail to secure the lucrative prize of an agency, most recently demonstrated in the EBA’s move to Paris.
Source: POLITICO/ BJARKE SMITH-MEYER, 20th of July, https://www.politico.eu/article/money-laundering-eu-crackdown-5-reasons/