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EU heavyweight states push for joint supervisor against money laundering

Sat, 9th Nov 2019 06:00

By Francesco Guarascio

BRUSSELS, Nov 9 (Reuters) - The European Union's largest
states are pushing for the establishment of a new supervisory
authority that would take over from states the oversight of
money laundering at financial firms, after a series of scandals
at the bloc's banks.

In a joint statement, Germany, France, Italy, Spain, the
Netherlands and Latvia said the 28-country EU needed a "central
supervisor" to tackle the flow of dirty money within the bloc's
financial system.

The move comes after European lenders were shut down over
money laundering in Latvia, Malta and Cyprus, while top banks
from the Baltic and Northern Europe were involved in dodgy
transactions worth billions of euros of Russian dirty money
through the Estonian branch of Danske Bank, in what is seen as
the worst money-laundering scandal on the continent.

The need for an EU supervisor emerged after repeated
failures by national watchdogs at spotting and countering money
laundering, the statement said.

"Where large financial interests are at stake, there is a
risk of national supervisors being influenced directly or
indirectly by supervised institutions or interest groups," the
statement said.

The six countries said the new supervisor could be a new
body or an existing watchdog, the European Banking Authority
(EBA), which would need to be beefed up.

The call for change comes just few months after the bloc has
agreed to overhaul EBA's mandate to give the watchdog new powers
to tackle money laundering.

That reform, proposed by EU finance commissioner Valdis
Dombrovskis, a former prime minister of Latvia, quickly appeared
as insufficient to many observers.

The move marks a major shift in Germany's position. While
France, Italy and Spain have been calling for months for
stronger rules against money laundering, Berlin had opposed more
ambitious changes in recent overhauls.

The six states also call for new anti-money laundering
rules, in what would be the sixth review of those provisions,
just one year after their latest overhaul was agreed in a reform
now judged as "not decisive" by the six countries.

Existing rules should be merged into a single piece of
legislation directly applicable in EU states, the statement
said, reversing the existing system that allows countries to
adapt EU money-laundering rules to national prerogatives.

That has caused lenient application of the rules in several
states that, the statement says, could offer "arbitrage
opportunities" to lure financial firms.

The move comes after EU finance ministers discussed a reform
of money-laundering rules at a meeting last month and before
another gathering in December when a common EU stance is
expected to be adopted on the matter.

The Finnish presidency of the bloc prepared in October a
draft of the paper that should be adopted in December, which
called for changes similar to those contained in the six-country
(Reporting by Francesco Guarascio; editing by Jonathan Oatis)

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