Sunday, April 18, 2021

EU should take over supervision of bank money-laundering risks: ECB’s Enria

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The euro zone should favor mergers of banking groups in the bloc and take over the supervision of money-laundering risks from national authorities, the European Central Bank’s top watchdog said on Friday.

Andrea Enria’s remarks followed a series of money-laundering scandals at European banks which have exposed vulnerabilities in the bloc’s ability to counter financial crime.

“If you want to be serious about this issue you need to have the courage to move these responsibilities to the European level and to strengthen these much more,” Enria told a conference in Florence, Italy.

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Under EU rules, money-laundering risks are mostly monitored by national authorities. The ECB is the euro zone’s top supervisor of bank financial stability, which can be put at risk by exposure to financial crime.

“We have a single market, which means whenever criminal money enters the system, it is in the system, so you need to have a common protection of this system,” Enria said.

Recent money-laundering cases at euro zone banks show that allegedly illegal transactions went through different countries of the bloc, making national checks less effective.

Faulty anti-money laundering procedures are also increasingly causing financial problems to banks, with investors fleeing lenders perceived as being at risk of exposure to financial crime.

More: ECB calls for clearer common EU rules to combat money laundering

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Danske Bank, Denmark’s largest lender, and Sweden’s Swedbank have seen their shares drop after allegations of their involvement in a money-laundering scandal in the Baltic region.

Danske Bank has admitted that 200 billion euros of suspicious transactions flowed through its Estonian branch between 2007 and 2015.

The EU banking watchdog, the European Banking Authority (EBA), found that Danish and Estonian supervisors had breached EU rules with lenient oversight of Danske Bank, a draft report shows.

“If you have a weak authority in the system … then the whole single market is dented,” said Enria, who chaired the EBA before starting his ECB job in November.

The limits of a mostly national supervision of financial crimes that are largely cross-border have long been criticized by the ECB and the EU parliament, but EU states keep defending their national competences.

In April, national supervisors rejected EBA’s draft report over the breach of EU law in the Danske case.

Enria also insisted that the bloc should do more to favor banking mergers, especially between groups from different countries.

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