Financial Crime World

EBA Calls for Strengthened Powers to Combat Money Laundering

The European Banking Authority (EBA) has revealed that its powers to enforce anti-money laundering (AML) standards are severely limited, according to an investigation by the agency.

The EBA’s findings come amidst the ongoing “Cum-ex” scandal, which has rocked the financial world. The agency lacks the legal tools to compel national authorities to change their approach in combating money laundering. Despite being responsible for monitoring AML compliance, the EBA is unable to supervise individual financial institutions or enforce compliance in a way that would prevent breaches of EU law.

Proposed Review of EBA’s Mandate

In an effort to address these deficiencies, the European Commission proposed a review of the EBA’s mandate in September 2018. The reviewed mandate aims to consolidate AML/CFT powers within the EBA and grant it new powers to prevent money laundering in the financial system.

New Powers for the EBA

Under the amended regulation, the EBA has been given a clear mandate to prevent AML through both new and strengthened existing powers. Some key changes include:

  • The ability to carry out investigations on allegations brought to its attention concerning material breaches or non-application of EU law.
  • The power to request competent authorities to investigate any possible breaches, consider taking decisions, and impose sanctions on financial institutions that fail to comply with their legal obligations.

Expected Outcomes

The EBA’s new powers are expected to enhance supervisory convergence and harmonization across the EU. Its “data-hub” role will enable it to collect information from national authorities and provide a centralized platform for monitoring AML risks.

Call for Further Action

In light of these developments, the European Parliament’s Special Committee on financial crimes, tax evasion, and tax avoidance (TAX3) has called for further action to strengthen the EBA’s powers and ensure effective enforcement of AML standards.