New European Banking Authority CEO: New Anti-Money Laundering Mandate Insufficient to Address Money Laundering Threat

On June 11, the Financial Times reported that the new chief executive of the European Banking Authority (EBA), José Manuel Campa, stated that the anti-money laundering (AML) mandate that the EBA received was insufficient to address the volume of money laundering in the European Union (EU).  That mandate, according to the Financial Times, “is limited to collecting, analysing and disseminating information to ensure that national authorities ‘effectively and consistently supervise the risks of money-laundering and that they co-operate and share information’.”

In an interview with the Financial Times, Campa said, “ I don’t think the mandate that the EBA has received is the mandate that will solve that problem . . . . It is not a mandate to harmonise AML, either regulation or practices, across the union.  Because to start that process you first need legislation.”  He reportedly also characterized that mandate as “a narrow, co-ordinating role rather than one that will ensure even defences across the EU against ill-gotten gains.”

Noting that the mandate carried with it only 10 additional EBA staff positions, Campa was careful to set expectations low.  In his words, “We need to be prudent on the expectations of the [AML] mandate . . . . It has been an evolutionary situation and we have a mandate to try to co-ordinate the single regulatory framework of AML.”

While there have been growing calls to establish a single AML regulator across the EU, Costa made plain his concern that the EU first needed to harmonize its AML directives, “which leave member states with flexibility on how to interpret directives.”  He maintained that

[y]ou need to start with regulation that is homogeneous. We don’t have that. AML as an activity in the EU is regulated by directives. By definition that does not provide a single rule book. If you have a single rule book you can start thinking about a single authority. So maybe the discussion has gone too fast.

With regard to the controversial April 2019 decision by the EBA Board of Supervisors to close an EBA investigation into the Danish and Estonian Financial Services Authorities’ oversight of Danske Bank, Campa

warned against “extrapolating” what that ruling by the EBA’s board of directors might mean about its appetite for tackling money laundering. “Because I think there is a strong record of the EBA coming forward with decisions that have been helpful in constructing the single market.”

Note:  Costa’s remarks may simply have been intended to temper EU expectations about how effective the EBA could be, with its current authority and resources, to exercise effective control over the money laundering problem across Europe.  They may also have been a subtle bid to the European Commission (EC) and EU legislators to consider conferring even more AML regulatory authority on the EBA.

In any event, Costa must now expect that, rightly or wrongly, EU legislators and the EC have heightened expectations about the EBA’s ability to exert greater authority in EU-wide AML oversight, and will judge him and the EBA in part on how well the EBA makes use of the mandate it already has.

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