EU mulls money laundering action after bank cases

EU BANKS face an anti-money laundering crackdown before the end of the year, following allegations of wrongdoing at two Latvian and Maltese lenders, top officials say.

The collapse of Latvia’s ABLV and the freezing of operations at Malta’s Pilatus Bank exposed shortfalls in recent reviews of anti-money laundering rules, which the 28-member EU is now trying to address.

Both banks were at the centre of money laundering allegations by US authorities, which the head of eurozone banking supervision Daniele Nouy said revealed a “very embarrassing” weakness in European oversight.

“There is agreement on the importance of enhancing the current monitoring of the implementation of anti-money laundering measures,” Mario Centeno, head of the Eurogroup of eurozone finance ministers, said in a letter to the President of the European Council, Donald Tusk, before a summit on Friday.

He said a report on strengthening oversight will be prepared next month, paving the way for “further measures by the end of 2018”.

Newly-adopted anti-money laundering rules, set to enter into force by 2020, foresee the establishment in all EU countries of centralised bank account registers to gather financial data.

Assets frozen Pilatus had long been a concern for eurozone supervisors, but Maltese authorities froze the bank’s assets only after its Iranian chairperson was arrested in the US in March on charges of money laundering and bank fraud.

Latvia’s ABLV has denied any wrongdoing, while Pilatus has not replied to requests for comment.

The two cases raised wider concerns over national oversight in smaller EU states. The European Banking Authority this month began a formal inquiry into how Maltese supervisors dealt with Pilatus after they failed to act for several months on its Azeri connections.

“We need to draw practical lessons from the events in Malta and Latvia,” EU justice commissioner Vera Jourova told EU lawmakers this week, calling the Pilatus and ABLV cases “scandals” that required actions.

She flagged the possibility of setting up an EU “centralised body” to address money-laundering risks.

Some states have expressed a will to establish a new body to counter money laundering, while others favour giving more power to one of the existing EU regulators. Germany and France, the eurozone’s largest members, last week called for an EU deal by the end of the year to measure the money-laundering risks within the banking sector. – Reuters