BRUSSELS (Reuters) - A European Union plan to counter money laundering at banks urges a review of a series of recent high-profile cases but defers a comprehensive reform, a draft document seen by Reuters showed.
The plan is a response to alleged money-laundering scandals involving banks in Denmark, Estonia, Latvia, Luxembourg, Malta, Spain, the Netherlands, Britain and Cyprus, with schemes often executed through foreign branches inside the EU.
The preliminary document, dated Oct. 29, which is subject to changes until its adoption in early December, mandates the European Central Bank (ECB) and the European Commission to review alleged money-laundering cases by mid-2019 with a view to “possible additional actions” to bolster the EU legal framework.
The document outlining the plan lists a number of short-term non-legislative measures to be taken by the end of next year to improve the EU’s ability to prevent and counter financial crime.
EU supervisors would have clearer powers to assess whether bank managers are fit for their job and to withdraw banking licences for serious breaches of anti money-laundering rules.
In a recent case involving Malta’s Pilatus Bank, the ECB is facing legal hurdles to revoke the lender’s licence after its chairman was arrested in March in the United States for alleged money laundering and bank fraud. He denies the accusations.
EU sources said that the delay was caused by unclear rules and excessive discretionary powers for national supervisors.
The plan says that “a clear sign” should be sent to banks that money laundering risks will be taken into consideration when the ECB assesses lenders’ financial stability.
Latvia’s ABLV collapsed in February after the United States accused the bank of money laundering.
But the plan does not propose a comprehensive reform of EU rules and defers a more meaningful overhaul.
The draft document invites the European Commission to assess current legal gaps by September 2019 and to propose other long-term measures to strengthen EU rules, but does not explicitly mention forming a common agency to supervise financial crime, as demanded by the ECB.
An EU-wide agency would break the “weak links” in some EU countries “where money launderers tend to concentrate their activity”, in some cases even with the complicity of governments, the influential Brussels-based think-tank Bruegel said in a report last week.
The draft plan calls for the application of existing rules against money laundering, which have been reformed several times in recent years.
But it falls short of calling for new legislative changes which could close other existing loopholes which allow EU countries to set low fines for banks involved in money laundering and to avoid disclosure of wrongdoers.
Reporting by Francesco Guarascio; editing by David Evans and Alexander Smith