In a time that discriminatory practices of banks are increasing, including malpractices around black lists, it is worrying that the European Banking Federation (EBF) is promoting harmonisation of European AML/CFT legislation. It is clear that the Anti-Money Laundering Regulation is coming, a worrying perspective. I am sure this will make the situation worse for citizens of the EU.

Read the recent EBF press release (also available als pdf):

EBF presents recommendations on fighting dirty money in EU
EBF PRESS RELEASE

* EBF Blueprint published: ‘LIFTING THE SPELL OF DIRTY MONEY’
* Banks recommend: HARMONISE, COOPERATE, EMPOWER, BE SMARTER
* EU/EEA entities need reinforcing, better cross-border coordination

BRUSSELS, 10 March 2020 – As the European Commission is preparing its next steps towards creating a solid EU framework for fighting money launderers, the European Banking Federation today presented its blueprint with recommendations for an effective EU’s Anti-Money Laundering policy, known as AML.

The report identifies four priorities that need to be addressed. In concrete terms, the EBF suggests to:

* HARMONISE the EU AML framework and strengthen its risk-based nature;
* EMPOWER EU/EEA-wide supervision and law enforcement by strengthening the institutional architecture;
* Enable all parties to effectively COOPERATE and share information;
* BE SMARTER by leveraging new tools and technologies that can enhance the due diligence process.

Based on these four priorities, the EBF has formulated 20 concrete policy recommendations that are elaborated in the 40-page EBF blueprint ‘Lifting the Curse of Dirty Money’. Click here to access the blueprint. (…)

Their ‘blueprint’ is to be found here (pdf).

Read my articles on the discriminatory practices of banks, to be found under the tags for de-risking, compliance-uitsluiting and AML by banks.

My twitter comment:

If only this does not mean:
– more de-risking
– more discrimination of clients
– more unlawful blacklisting of clients
– more time-consuming questions posed to clients that cost a fortune to answer them #AML @EBFeu https://t.co/3AqxkQrvfr

— Ellen Timmer (@Ellen_Timmer) March 11, 2020

Addition 24 april 2020
Read this article (Dutch) on a bankingsite, it shows that European supervision is coming. And what is worrying: a concept for banks is also used for the garage and a small notary office.

Addition 11 January 2021
EBF has provided feedback to the European Commission’s proposed AML Package, read the article. They start with:

The European Banking Federation (EBF) is fully supportive of the Commission’s overarching objective to address the ineffectiveness of the current EU AML framework. Bearing in mind the necessary lead-time and efforts to get the AML Package adopted and implemented, this momentum is a unique opportunity to improve the framework.

According to the EBF, a paradigm shift is needed. This consists in moving away from the existing legalistic and bureaucratic tick-the-box approach which generates massive flows of irrelevant data that Financial Intelligence Units cannot exploit in an efficient manner. Some of the steps proposed in the package are going in the right direction, notably by addressing the existing regulatory and supervisory fragmentation, as well as extending transparency requirements to crypto-assets and crypto-asset service providers.

While the standardisation of key customer identity information for KYC purposes and beneficial ownership information introduced with the proposed AML Regulation is a positive move, the approach is too prescriptive, and the discretion left to the Member States in adopting additional measures may lead to gold-plating, reintroducing fragmentation. Besides, the proposed AMLD6 maintains the status quo about Beneficial Owner (UBO) registers. In the EBF’s view, UBO registers need to be not only harmonised and interlinked, but also significantly strengthened.

EBF’s documents: 1, 2, 3, 4.

EBF also responded to Public Consultation on Guidance on the Rules Applicable to the Use of Public-Private Partnerships in The Framework of Preventing and Fighting Money Laundering and Terrorist Financing, read the article, read their response. Banks ask for these partnerships, as they want more information to enable them to do their crimefighting tasks better, from the article:

At present, obliged entities send large numbers of SARs to FIUs with no or insufficient quantitative feedback. This situation does not allow obliged entities to focus on the most relevant predicate offenses and leads to an increased number of false positives. Often finding the relevant information for law enforcement authorities may feel like finding a needle in a haystack. If an intelligence-led approach were applied in the AML/CFT framework, obliged entities could receive information on current trends and typologies, as well as operational data which would allow them to focus their efforts on priorities as defined by law enforcement authorities. As a result, obliged entities would be able to send back more actionable data and do it in a smarter and aligned with data minimisation requirements way, reporting information when truly necessary.

The complex nature of money laundering and terrorism financing, often involving cross-border flows of funds and the involvement of many layers of entities, makes it challenging to detect such crimes when the data available to do so is mainly limited to a regulated entity’s own customer base and available open-source intelligence. Being able to enrich this view with information from other private sector entities and competent authorities enhances the likelihood of effective detection for all parties involved in a public-private partnership. It also allows both obliged entities and public authorities to form a holistic overall view of the current trends.