Analytics, EU – Baltic States, Financial Services, Modern EU

International Internet Magazine. Baltic States news & analytics Wednesday, 21.11.2018, 02:05

Commission President’s last official message: appeal for strong and united Europe

Eugene Eteris, European Studies Faculty, RSU, BC International Editor, Copenhagen, 13.09.2018.Print version
European Commission President Jean-Claude Juncker delivered his fourth (and final in his term) annual State of the Union 50-minute long speech, in which he expressed official EU’s vision for a "stronger and more united" Europe. The President touched upon numerous other topics, e.g. growing nationalism, Brexit, geopolitics, migration and the euro. For the Baltics, money laundering issue has become vital too…

In his State-of-the Union-address, SoU (in 14 pages), he managed to cover most pressing for the EU’s integration issues. He started with the appeals for unity and solidarity among different European nations, especially when it comes to trade deals, geopolitics and migration.


As soon as the EU member states continue to squabble over the best way to tackle the migrant and refugee crisis, the issues of “borders” was important as well.


Instead of “condemning populism” (a recurring theme in recent elections across EU states), the Commission President concentrated on the states’ "sovereignty" and the EU’s and states’ obligations and responsibilities on the international stage.


"The geopolitical situation makes this Europe's hour: the time for European sovereignty has come. It is time Europe took its destiny into its own hands," he said.


Euronews underlined other note-worthy words in the speech: - "elections" (the EU Parliament election will take place next year); and - "Africa" (he described the continent as "the future" and pushed for deeper partnership).


See more in: http://www.euronews.com/2018/09/12/juncker-s-state-of-the-union-the-words-to-remember


Previous SoUs

Seemingly, the 2017 and 2016 speeches have been rather similar: hence, such issues as “unity” and “solidarity” were among the main themes, as well as the economic ones. There were slightly different themes in SoU- 2015, which included such issues as refugee crisis and asylum seekers, Greece and eurozone problems.


Quite notable, that recently Greece had voted in a referendum to decide whether to accept the bailout conditions laid down by its creditors. The country was still in the midst of a persistent recession that continued to threaten the survival of the euro single currency.


Addressing money-laundering

While the EU has strong anti-money laundering rules in place, recent cases involving money laundering in some EU banks have raised concerns that those rules are not always supervised and enforced effectively. This creates risks for the integrity and reputation of the European financial sector and can damage financial stability for specific banks. 


As part of the broader efforts to complete Banking Union by risk reduction and risk sharing and develop Capital Markets Union, decisive action must be taken to ensure that anti-money laundering rules are effectively supervised across the EU, and different authorities cooperate closely with each other. 


The Commission proposed amendments to the Regulation on the European Banking Authority (EBA) in order to strengthen the EBA's role and give it the necessary tools and resources to ensure effective cooperation and convergence of supervisory standards. 


This is part of a broader strategy to strengthen the EU framework for prudential and anti-money laundering supervision for financial institutions. It consists of legislative and non-legislative measures to make anti-money laundering supervision more effective and improve the cooperation between prudential and anti-money laundering supervisors. 


These measures will contribute to promoting the integrity of the EU's financial system, ensuring financial stability and protection from financial crime.

 

The supervisory framework for combating money laundering is based in the EU on the Anti-Money Laundering Directive, which also applies to a number of actors outside the financial services sector. While the rules are set at European level, their enforcement is carried out by national authorities. 


The fifth revision of the Anti-Money Laundering Directive is an important step forward towards a stronger supervision of money-laundering issues in the EU. The Directive sets up a system for better cooperation and exchange of information between money-laundering and prudential supervisors. It also provides for the conclusion of a Memorandum of Understanding between the money laundering supervisors and the European Central Bank for the exchange of information. 


See more on the Directive in:

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32018L0843

 


Additional actions on supervision

Despite existing strong legislative framework, several recent cases of money laundering in European banks have given rise to concerns about weaknesses and gaps in the implementation of the legislative framework by the EU's network of different supervisors, in relation to three issues in particular: 

  • Delayed and insufficient supervisory actions to tackle weaknesses in financial institutions' anti-money laundering risk management;
  • Shortcomings with respect to cooperation and information sharing both at domestic level, between prudential and anti-money laundering authorities, and between authorities in different Member States;
  • Lack of common arrangements for the cooperation with third countries in relation to the anti-money laundering supervision of financial institution. 

 

It was agreed in the EU, that the supervision of compliance with anti-money laundering legislation is carried out at the national level. However, in the EU’s Banking Union, the Single Supervisory Mechanism (SSM) is tasked with the direct supervision of significant banks. At the same time, for the prudential aspects relevant to money laundering supervision, it has to apply and rely on national legislation transposing EU Directives in the member states.


At EU level, the European Supervisory Authorities (the European Banking Authority, the European Securities and Markets Authority, the European Insurance and Occupational Pensions Authority) have the mandate to ensure that the Union's prudential and anti-money laundering rules are applied consistently, efficiently and effectively. However, this is just one of the many tasks these authorities have to carry out. In addition, supervisors are subject to differently transposed national rules, as prudential requirements in legislation have not been supplemented with harmonised guidance. 


Changes in the anti-money laundering framework

In order to reduce risks in the EU financial system, the updating of the European Supervisory Authorities is introduced with a set of targeted amendments to the existing legislation on prudential supervision. Anti-money laundering responsibilities in the financial sector will be entrusted specifically to one of the three European Supervisory Authorities, namely the European Banking Authority (EBA), as it is in the banking sector that money-laundering is having a “systemic impact”: the EBA's mandate will be more explicit and more comprehensive, accompanied by a clear set of tasks, with corresponding powers and adequate resources.

Besides, the Commission will give the EBA a mandate to ensure that risks of money laundering in the Union's financial system are effectively and consistently incorporated into the supervisory strategies and practices of all relevant authorities. 


The amended Regulation will:

  • ensure that breaches of anti-money laundering rules are consistently investigated: the EBA will be able to request national anti-money laundering supervisors to investigate potential material breaches and to request them to consider targeted actions - such as sanctions;
  • provide that the national anti-money laundering supervisors comply with EU rules and cooperate properly with prudential supervisors. The EBA's existing powers will be reinforced so that, as a last resort if national authorities do not act, the EBA will be able to address decisions directly to individual financial sector operators;
  • enhance the quality of supervision through common standards, periodic reviews of national supervisory authorities and risk-assessments;
  • enable the collection of information on anti-money laundering risks and trends and fostering exchange of such information between national supervisory authorities (so-called data hubs);
  • facilitate cooperation with non-EU countries on cross-border cases;
  • establish a new permanent committee that brings together national anti-money laundering supervisory authorities.

These amendments will bring major improvements to the supervisory framework of anti-money laundering risks and contribute to risk reduction in the financial sector, as seen in the table below.



 

 


Three European Supervisory Authorities combating money laundering

A dedicated committee will be established within the EBA to prepare decisions relating to money laundering and terrorist financing measures (comparable to the existing EBA bank resolution committee). It will be composed of heads of national supervisory authorities responsible for ensuring compliance with laws against money laundering and terrorist financing. The EBA will also cooperate closely with the ESMA and the EIOPA in the framework of the existing Joint Committee of the European Supervisory Authorities (ESAs). 


More in: http://europa.eu/rapid/press-release_MEMO-18-5725_en.htm?locale=en






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