Wednesday, January 20, 2021

EU Doesn’t Prosecute for Money Laundering, Financing of Terrorism and Corruption

-

A Modest Proposal

The European Union (“EU”) recently has grappled with a series of massive money laundering scandals and strategized about how to more effectively combat international money laundering and corruption. Generally, the EU has continued to issue a series of reports identifying systemic vulnerabilities to money laundering and suggest process-based recommendations for how to address future threats. These recommendations typically mirror the same range of process-based improvements set forth in earlier reports: from enhancing cross-border information sharing to increasing resources for adequate implementation and enforcement of anti-money laundering (“AML”) and counter financing of terrorism (“CFT”) policies implemented by EU member states and financial institutions. Noticeably absent from these recommendations is one of the most powerful deterrents available – and a distinctly American approach – prosecuting the bad actors.

Although many of the recent EU money laundering scandals rest on conduct occurring years ago, the recurring waves of scandals strongly suggest that the EU – like the U.S. – has a serious problem with money laundering that is not going away any time soon. They likewise indicate that the EU’s financial system will continue to be abused by bad actors who appear to be unfazed by any potential consequences. The EU therefore should consider emulating – at least in part – the American approach of more aggressively investigating and prosecuting individuals, including the corrupt politicians, kleptocrats, drug dealers, fraudsters, and other criminals from around the globe who are laundering sometimes massive amounts of funds through European financial institutions.

Very recently, in a different but related context, the Chairman of the U.S. Securities and Exchange Commission (“SEC”), Jay Clayton, delivered a speech during which he bemoaned his perception that his foreign counterparts failed to rigorously enforce their own anti-corruption laws. Specifically, Chairman Clayton asserted the following:

Corruption is corrosive. We see examples where corruption leads to poverty, exploitation and conflict. Yet, we must face the fact that, in many areas of the world, our work may not be having the desired effect. Why? In significant part, because many other countries, including those that have long had similar offshore anti-corruption laws on their books, do not enforce those laws.

Granted, the above comments pertained specifically to enforcement of the Foreign Corrupt Practices Act (“FCPA”), and arguably the comments were in furtherance of a pro-American message regarding international competition between countries. The comment nonetheless exemplifies a certain American perception: the U.S. aggressively prosecutes individuals, whereas Europe does not. Obviously, this issue entails a lot of cultural baggage on both sides.

Although there are viable criticisms of the U.S. approach (both in theory and in practice), and although the EU’s strong focus on process and institutions’ AML and CFT systems is critical, any government’s enforcement “tool bag” must include targeted prosecutions of the people responsible for the laundering violations. Otherwise, few bad actors around the world will think twice about continuing to turn to EU institutions for their laundering needs. This blog post explores this idea.

- Advertisement -
- Advertisement -
Advertisement

Must Read

A major donor to the National Rifle Association is poised to challenge key aspects of the gun group’s bankruptcy filing, in an attempt to hold...
A Texas megachurch pastor and former spiritual adviser to two U.S. presidents has been sentenced to six years in prison for bilking investors out...
Samsung Electronics Co. heir Jay Y. Lee was sentenced to 30 months in prison over bribery charges, a dramatic setback for the world’s biggest...
Credit card firm Capital One Financial Corp has been fined $390 million for engaging in what the U.S. government called willful and negligent violations...
European Central Bank President Christine Lagarde took aim at Bitcoin’s role in facilitating criminal activity, saying the cryptocurrency has been enabling “funny business.” “For those...
Advertisement

Latest News

Seven current and former Hong Kong bankers were arrested in a series of raids on Tuesday as police moved against an international money-laundering syndicate...
A slew of admitted mobsters will now be trading their tony Westchester County digs for the bing. A Gambino captain and 10 members and associates...
A major donor to the National Rifle Association is poised to challenge key aspects of the gun group’s bankruptcy filing, in an attempt to hold...
A Texas megachurch pastor and former spiritual adviser to two U.S. presidents has been sentenced to six years in prison for bilking investors out...
Samsung Electronics Co. heir Jay Y. Lee was sentenced to 30 months in prison over bribery charges, a dramatic setback for the world’s biggest...
Advertisement
Advertisement
Enable Notifications    OK No thanks