Some EU member states face unenviable task of juggling updates to multiple AML directives
Just roughly a year ago – which seems like a decade with the COVID-19 pandemic upending personal and professional lives across the public and private sectors in 2020 – the EU commission took aim at a different crop of countries for failing to live up to AML ideals, that time around tied to the AMLD5.
In February 2020, the EU formally threatened Cyprus, the Netherlands, Spain and five other countries for tarrying on implementing updated financial crime compliance defenses, an effort further complicated by another banking watchdog at the time also bolstering guidelines on how institutions should broadly calculate financial crime risks.
At that time, the EU sent letters of formal notice to Cyprus, Hungary, the Netherlands, Portugal, Romania, Slovakia, Slovenia and Spain for not having properly updating and transposing measures for AMLD5 – rules updated more than two years ago with, as we noted above, a January 2020 deadline.
The 27 EU states were required to enact by January tighter rules to counter dirty-money risks in a wide range of sectors, including cryptocurrency exchanges, prepaid cards and shell companies, with failures in implementing AMLD5 made all the more galling by the Danske Bank scandal, which shook the foundations of the bloc and perception it is a safe and stable place for clean money.
At the supranational level, the Danske scandal has caused European Union financial oversight bodies and regulators, at the country and bloc level, to engage in a game of naming, blaming and shaming, with accusations and recriminations at all levels on how and why the Danske Bank scandal could occur in the first place and fester for so long under the noses of examiners.
In 2019 and into 2020, the EU pushed more forcefully to create a dedicated pan-bloc AML oversight and enforcement body that would put regional regulators in the hot seat and better attempt to see fincrime vulnerabilities happening across multiple member states.
That would address the tactics of large, sophisticated organized criminal groups, corrupt oligarchs and terror networks, cabals that purposefully spread transaction trails through the real and virtual worlds and across multiple banks, jurisdictions and payment types, like prepaid cards and money remitters, to make seeing their full financial mosaic as difficult as possible.
Taken together, the tacit message to banks in Europe is one that should not be ignored: Get your fincrime compliance house in order because more regulators will be looking more aggressively at your program and if they don’t like what they see, be prepared to react, and act, quickly – or face harsher sanctions and less leeway than in years past.