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ECB steps up checks of banks at high risk of laundering money

FRANKFURT (Reuters) - The European Central Bank is stepping up scrutiny of banks it sees at high risk of laundering money by launching a dedicated network of watchdogs sharing information on the matter, its chief supervisor Daniele Nouy said on Tuesday.

FILE PHOTO: Daniele Nouy, chair of the Supervisory Board of the European Central Bank, looks on during a Thomson Reuters newsmaker event at Canary Wharf in London November 28, 2014. REUTERS/Neil Hall )

It was the first concrete response by the ECB’s Single Supervisory Mechanism (SSM), the euro zone’s top banking watchdog, to a string of money-laundering scandals affecting banks in Denmark, Malta and Latvia in recent months.

Nouy said the SSM would set up an anti-money laundering (AML) office to collect and share information from its supervisors and other authorities.

“The AML Office will set up and chair ‘an AML Network’ among Joint Supervisory Teams in charge of the banks whose business model leads to a high level of money laundering risks,” Nouy told European Union parliamentarians.

Denmark's Danske Bank DANSKE.CO was the most high-profile bank to become embroiled in a money laundering scandal this year after revelations from a whistleblower.

Danske Bank has acknowledged that its money laundering controls in Estonia were insufficient, but in a report issued in September said its board, chairman and chief executive had not breached their legal obligations.

Malta’s Pilatus Bank and Latvia’s ABLV were also accused of laundering money by U.S. authorities, spurring charges that European watchdogs had failed to tackle the problem.

Pilatus Bank, which was shut down by the ECB this month, was accused of processing corrupt payments by investigative journalist Daphne Caruana Galizia, who was killed a year ago by a car bomb in Malta. Reuters tried to contact Pilatus Bank several times but was unable to talk to a bank representative.

ABLV, which denies wrongdoing, was declared failed by the ECB and put into liquidation after U.S. authorities accused it of large-scale money laundering and facilitating the breach of sanctions against North Korea.

The ECB has said it lacks a legal mandate to pursue money-laundering, which is typically in the hands of dedicated authorities in individual EU countries.

Nouy said the SSM’s new initiative was “in full respect of the allocation of anti-money laundering responsibilities within the current legal framework”.

Reporting By Francesco Canepa; Editing by Balazs Koranyi and Gareth Jones