EU mulls clampdown on money laundering after bank troubles

BRUSSELS – Reuters

European Union governments are considering new rules to counter money laundering after alleged wrongdoing at two banks in smaller states of the bloc flagged risks to financial stability, according to officials and an EU document.

The possible move follows the collapse of Latvian bank ABLV in February and the freezing of operations at Malta’s Pilatus Bank in March after allegations of money laundering.

In both cases, the alleged wrongdoing was exposed by U.S. authorities and not by EU watchdogs - a situation that the head of euro zone banking supervision, Daniele Nouy, said was “very embarrassing” as it showed weaknesses in European oversight.

European finance ministers discussed how to strengthen the EU oversight at an informal meeting in April and are likely to address the topic again in regular monthly meetings later on Thursday and on Friday, as part of discussions on banking rules reform, three EU officials told Reuters.

“EU states agree that the existing anti-money laundering provisions are not sufficient,” one of the officials said, reporting discussions held by EU states’ envoys last week to prepare this week’s meeting of finance ministers.

Banks are free to move capital across EU states and beyond, but checks on money laundering and other financial crimes remain largely a national competence - a mismatch that EU authorities say could hamper controls and create financial stability risks.

The recent banking troubles in smaller member states have strengthened the arm of those who want to enhance EU oversight powers, overcoming long-standing resistance in some capitals to relinquish national competence on this.