BRUSSELS – In the wake of some recent financial scandals, the European Commission presented new legislative proposals on Tuesday 20 July to strengthen the fight against money laundering in the European Union. Having acknowledged that simple collaboration between national authorities is not enough, the EU executive decided to propose the creation of a European body with supervisory power over the most important financial institutions.
Towards a supervisory code
“Every new money laundering scandal is one too many scandal (…) We have made great strides in recent years and our EU anti-money laundering rules are now among the strictest in the world. But they need to be applied consistently and closely watched to make sure they really work. That is why we are taking courageous steps today to close the door to money laundering, ”said Commission Vice President Valdis Dombrovskis. The proposal to create a new authority in the fight against financial crimes is certainly the main dish of the Community proposals. The new body will have to prepare a supervisory code in this field (also relating to cryptocurrencies); supervise directly the most exposed institutions; and coordinate the work of national authorities. The new community body should see the light in 2024 and have about 250 employees, of which 100 are dedicated to the supervision of the most important institutions.
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Two bodies based on the ECB model
The new authority will have two bodies. An executive committee headed by a chairman and composed of five other permanent and independent members; and a general council composed of representatives of national bodies. The structure mirrors that of the European Central Bank. While the General Board will be called upon to adopt regulatory rules, the Executive Board will take decisions regarding individual financial institutions or individual national authorities.
Some countries opposed
A green light for the Brussels proposal came from the finance ministers last November (see Il Sole / 24 Ore of 5 November 2020). To many observers, cooperation between member countries has appeared insufficient in recent years; but until the end some governments have opposed the idea of a common authority, preferring to maintain freedom at the national level. Among them Cyprus, Malta, Estonia. It remains that the negotiation between Parliament and the Council will be difficult.
The current structure is based exclusively on cooperation between member countries within the European Banking Authority (known by the English acronym of EBA). Moreover, the community rules were adopted not with a regulation that has the force of law directly in the individual states, but through more generic and less precise directives that must be transposed at national level. The aim is to strengthen the regulatory and institutional framework.