EU Banking Authority Discovers Disparities in Money Laundering Responses to Angolan Leaks

Report Reveals Significant Differences in EU Countries’ Handling of Potential Money Laundering and Terrorist Financing Risks from Angolan Leaks

The European Banking Authority (EBA) has published a report [Download Report] highlighting disparities among European Union (EU) countries in their response to potential money laundering (ML) and terrorist financing (TF) risks identified in the 2020 Luanda leaks. These discrepancies went beyond what the EBA had anticipated under a risk-based approach.

The Impact of the Luanda Leaks

The leaked documents from the International Consortium of Investigative Journalists (ICIJ) raised concerns about Isabel dos Santos and her associates, indicating that Eurozone financial institutions may have been processing proceeds from corruption. In response, the EBA assessed the actions taken by EU regulatory bodies to address these potential risks.

The Disparate Responses

Over half of European competent authorities reviewed the leaked ICIJ documentation. Some discovered connections to institutions and Isabel dos Santos and her associates, despite these institutions not being explicitly mentioned in the leaks. Conversely, others failed to take any action upon discovering these allegations. This inconsistent approach leaves the EU’s financial sector vulnerable to continued laundering of corruption-tainted funds linked to Isabel dos Santos and her associates.

The Lack of Communication

Not every competent authority utilized available channels to exchange information and deepen their understanding of ML/TF risks related to these leaks.

EBA’s Recommendations

To aid EU countries in addressing emerging ML/TF risks related to the Luanda leaks, the EBA has established guidelines:

1. EBA Risk-based Supervision Guidelines
2. EBA Guidelines on ML/TF risk factors
3. ESA joint Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings
4. EBA New Guidelines on a common assessment methodology for granting authorization as a credit institution
5. EBA Guidelines on the assessment of suitability and internal governance
6. Revised SREP Guidelines
7. EBA New Guidelines on cooperation between prudential and AML/CFT supervisors and Financial Intelligence Units (FIUs)

Background

The International Consortium of Investigative Journalists (ICIJ) Leaks

In January 2020, the ICIJ published more than 200,000 documents about the financial dealings of Isabel dos Santos, the daughter of a former Angolan president, and connected entities [1].

The European Parliament’s Call for Action

As a response to these revelations, the European Parliament passed a resolution asking the EBA to assess the strategies, capacities, and resources of EU regulatory bodies to address ML/TF risks related to the Luanda leaks [1].

The EBA’s Role and Response

The EBA conducted an inquiry under Article 9a(5) of the EBA Regulation to address the European Parliament’s request. This investigative tool allows the EBA to examine competent authorities’ abilities to tackle pressing ML/TF risks at the Union level.

[1] European Parliament, Resolution on a comprehensive Union policy on preventing money laundering and terrorist financing – the Commission’s Action Plan and other recent developments (2020/2686(RSP)), paragraph 20.