On 5 September 2019, the European Banking Authority (EBA) published a speech given by Jose Manuel Campa, EBA Chair, on the EBA’s current and future anti-money laundering (AML) and counter terrorist financing (CTF) powers.
Mr Campa discusses the limitation of the EBA’s existing powers in relation to enforcing its standards and guidelines and to promote convergence. While the EBA can make recommendations if it becomes aware of a breach of EU law, it cannot make up for weak provisions in EU law or ineffective supervisory practices at the Member State national level. The EBA needs to consider how it can utilise its full range of both ex ante and ex post implementation tools to facilitate and encourage effective implementation whilst ensuring responsibility for effective supervision sits with Member State national competent authorities (NCAs).
Over the past few years, Mr Campa describes the EBA’s progressive development in understanding the problems in this area and how it has shared its experience and lessons learnt with the European Commission. However, in relation to NCA’s, the EBA has observed some poor practices which requires a concerted effort to address these. Mr Campa sets out the steps the EBA has taken to resolve this but comments that resources are limited in this area.
With respect to the EBA’s future AML/CFT role, Mr Campa states that there have been “modest but meaningful” changes to the EBA’s powers and tasks granted by amendments to its founding Regulation. However, Mr Campa explains that challenges still remain. Namely, the EU’s minimum harmonisation and directive based approach to AML/CFT does not eliminate national differences, and limits how much convergence the EBA’s guidelines and standards can achieve as NCA’s and financial institutions will not be able to comply with such guidelines if national law prevents them from doing so. Mr Campa adds that divergence of national practices exposes the EU’s internal market to significant money laundering and terrorist financing risks. To combat this, a move to a regulation-based framework is desired to help address such divergences and, Mr Campa argues, is a pre-requisite to more centralisation. Short of regulation, a more concrete set of supervisory powers, with more prescriptive common guidelines for sanctions of AML/CFT activities would also help.
Mr Campa ends his speech stating that while changes to the EBA Regulation and additional resources are helpful, the EBA needs to establish standardised risk-based methodologies, customer due diligence requirements, and improve cooperation and information sharing between NCA’s to ensure fundamental change in the system.