On 12 September 2018, the European Commission published an amended proposal on the amendment of the three regulations founding the European Supervisory Authorities (ESAs). The amendments proposed aim to centralise the tasks relating to the prevention and combatting of money-laundering and terrorist financing (AML/CTF) into the European Banking Authority (EBA). The amended proposal extends the supervisory powers of the EBA related to AML/CFT from the banking sector to the financial sector as a whole, thereby taking over the supervisory powers currently held by ESMA and EIOPA.
The Commission’s proposal comes in the wake of several recent cases of money-laundering in European banks which have occurred despite recent efforts to strengthen the AML framework through the adoption of the 4th and 5th Anti-Money Laundering Directives (AMLD). To address these shortcomings the Commission is now seeking to strengthen the supervision of AML/CTF practices.
The key amendments to Regulation 1093/2010 establishing the EBA are as follows:
- Article 1(2) will be amended in order to extend the scope of action of the EBA related to anti money-laundering and terrorist financing across the entire financial sector;
- a new Article 9a lays down the specific tasks conferred upon the EBA related to AML/CFT. These include information collection from national authorities, developing common standards, monitoring market developments and assessing vulnerabilities. The EBA would also be given the role of facilitating and coordinating communication with relevant third-country anti-money laundering supervisors in material cases with a third country dimension;
- for coordination and cooperation purposes, the same newly proposed article would establish an Anti-Money Laundering Committee integrated into the EBA. This committee would consist of heads of Member States authorities and bodies competent for ensuring compliance by financial institutions with the the 4th and 5th AMLD. Besides, observers from EIOPA, ESMA, ESRB, the Supervisory Board of the ECB and the European Commission would also be part of the Committee;
- a new Article 9b gives the EBA the power, when it has indications that Union laws pertaining to AML/CTF have been breached, to request competent authorities to start investigations and to consider taking decisions and imposing sanctions on financial sector operators breaching these rules;
- amendments to Articles 17 and 19 are proposed to give the EBA the power to take individual decisions addressed to financial sector operators outside its remit within the context of its mandate related to AML/CTF;
- Lastly, amendments are proposed to the regulations founding EIOPA and ESMA in order to remove AML/CTF activities from the scope of their tasks. AMLD would also be amended in that regard, removing references to these two authorities and replacing them with references to the EBA.
The above proposals made by the Commission are tabled as an amendment to the Commission’s September 2017 proposal amending the overall powers, structure and governance of the three ESAs. This initial proposal is undergoing legislative review by the co-legislators. The draft report on the overall proposal was sent to the European Parliament’s Economic and Monetary Affairs Committee in July 2018 and is being discussed to date. The progress of the negotiations amongst the Member States is also slow. The Commission has urged the co-legislators to incorporate this new proposal into their currents discussions and reach agreement swiftly.