Financial institutions against money laundering | AML

In recent years, the banking sector in the European Union has been shaken by different scandals related to money laundering.
On July 24th, 2019, the European Commission published reports including one on the assessment of recent alleged money laundering cases involving EU credit institutions. These reports demonstrated the gaps in the implementations of rules.

The fight against money laundering and the financing of terrorism is one of the main priorities of the European Commission. However, many financial institutions did not comply effectively, or not at all, with the requirements in the fight against money laundering and terrorist financing.

The up-to-date list of recent money laundering scandals in EU

August 2019
HSBC Private Bank SA
HSBC was sanctioned by the Belgian State and must pay a fine of 300 million euros for "serious and organized tax fraud, forgery and false use, money laundering and illegal exercise of financial intermediary". HSBC was already sanctioned in France on November 2017 and had to pay the same amount.
July 2019
Fine of ?300,00 from NBB for breaching money laundering rules linked a suspicious activity of a Russian-owned account.
300.000 ?
April 2019
Standard Chartered
Fine of $1.1bn ($947m to American agencies, including the US Department of Justice & ?102m to the FCA) for weak money-laundering controls and sanctions breaches against countries including Iran and, Syria by UK and US authorities
February 2019
Baltic Scandal
Denmark, Estonia, England
Scandinavian Banks, Danish bank Danske Bank and Swedbank have been involved in money-laundering schemes in Estonia and possibly other Baltic countries. Denmark, Estonia, Britain and the United States investigate 150 billion euros in transactions, most of which are suspicious, made via the Estonian division of the first Danish bank, Dankse Bank, notably from Russia and of several former Soviet Union countries.
Not yet sanctioned
September 2018
Fine by Dutch public prosecutor for poor anti-money laundering controls which in some cases allowed customers to launder cash for years: CCD files missing or incomplete, clients classified in the wrong segments
January 2017
Deutsche Bank
Fine of ?553.5 million by US and UK financial authorities for accusations of having laundered money out of Russia

As a result of these various scandals and to guarantee the integrity of the financial system of the European Union, these different reports made by the European Commission underlined the lessons learned and the things that need to be improved. The major gaps identified in the latest AML European Commission report are:

  • 1

    Misapplication or inapplicability of the legal obligations to which anti-money-laundering and terrorist financing systems and controls are subject;

  • 2

    Deficiencies of the authorities in the fight against ML and TF;

    • 3

      Lag between risk propensity and risk management;

      • 4

        Ineffective supervision of anti-money laundering and terrorist financing policies.

      The dissonance between Member States AML diligence

      Besides, the Commission noted that the Member States did not apply the rules in the same way, which makes it difficult for the Union to prevent money laundering and the financing of terrorism.
      Banks have not complied with essentials requirements of the anti-money laundering directive, such as risk assessment, customer due diligence and reporting of suspicious transactions to financial intelligence units and activities ;
      Public authorities intervened only after significant risks had materialized or only when they were aware of repeated cases of non-compliance with rules and governance. The reactions of banking supervisors have been variable in timing and action. The cooperation between the national supervisory bodies and the European Central Bank should be further improved.
      Even with the latest reforms and directives on money laundering (4th, 5th AML directive and soon the 6th AML directive) which solve a large part of the problems noted, the European Commission must implement new legislative acts.
Despite all the legislation taken to the fight against money laundering, several scandals still plague the banking institutions of the European Union. Provisions must be made to reduce or even eradicate these scandals. The public authorities will have to be proactive and not wait for several cases to be repeated. Perhaps a regulation will facilitate the task and help to standardize the fight against money laundering and terrorism in the European Union.
Stefano Siggia - Pideeco Network Partner
Stefano Siggia Senior Consultant
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