Raiffeisen Bank International : Room for improvement in the fight against money laundering

The EU Commission's new proposal against money laundering is an important milestone in the fight against money laundering and terrorist financing. In terms of efficiency and effectiveness, however, there is still room for improvement.

Every year in the EU, billions of dollars from criminal sources are infiltrated into the financial cycle. The European Court of Auditors estimates the value of the suspicious transactions at several hundred billion euros per year. At the same time, according to calculations by the European Banking Federation, the EU financial sector invests annually approx. 100 billion euros in financial crime prevention. However, only approx. 1% of criminal assets are confiscated. In addition, large cases of money laundering inthe EU have so far been mostly uncovered by US authorities. With a package of legislative proposals, the EU Commission is now planning to intensify the fight against money laundering and terrorist financing.

The proposal includes a regulation creating a new EU anti-money laundering and terrorist financing authority, anti-money laundering rules directly applicable in all member states for the first time and a cash cap of €10,000. EU Parliament and Council still have to agree to all this, which is why adjustments are to be expected.

An important step in the right direction

As an internationally active banking group, Raiffeisen Bank International welcomes the Europe-wide harmonisation of regulations in the joint fight against money laundering. Several of our key proposals for more effective and efficient measures can be found in the EU legislative package. In particular, the introduction of a regulation for central anti-money laundering rules and their uniform interpretation throughout the EU by the new authority is an important milestone. For the first time, uniform rules of the game apply directly to all member states throughout the EU.

In terms of effectiveness, however, there is still room for improvement in the Commission's proposals. For example, a central European Know-Your-Customer (KYC) register for legal entities would be desirable. A central KYC register at European rather than at national level, on which all actors can rely, would significantly reduce the administrative burden for companies, public authorities and banks, while at the same time increasing accuracy.

More competences needed for new EU authority

The new EU authority will play a central role in the fight against money laundering and terrorist financing. In this context, however, greater use could be made of the financial sector's expertise in preventing money laundering and mechanisms for enhanced cooperation with the private sector, including enhanced exchange of data, could be established. Increased cooperation between public and private bodies could significantly increase the efficiency of money laundering measures.

In our view, the purely supportive and coordinative role of the new EU authority towards the national money laundering reporting authorities is not far reaching enough. The establishment of a powerful EU authority for the central monitoring of all suspicious transactions in the EU area could significantly increase the effectiveness in the fight against money laundering. All in all, an important milestone in the fight against money laundering has now been reached, which the possibility of the EU Parliament and the Member States to even further improve the approach.