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Wednesday, March 3rd, 2021

European Supervisory Authorities address EU on anti-money laundering, counter-terrorist financing initiatives and risks

The European Commission recently heard testimony from three European Supervisory Authorities (ESA) on the various problems regarding money laundering and terrorist financing affecting the European Union’s (EU) financial sector.

The groups, the European Banking Authority, the European Insurance and Occupational Pensions Authority, and the European Securities and Markets Authority, submitted an opinion that sought to contribute to the commission’s risk assessment work on countering money laundering and terrorist financing.

The ESA joint opinion found that risks stem from ineffective anti-money laundering and terrorist financing systems and controls, and that lack of access to intelligence on terrorist suspects ultimately undermined efforts to curb harmful financial practices.

The report highlighted a number of initiatives already underway to address harmful financial practices including a provision to better supervise payment service providers and their agents, and the creation of joint-risk guidelines and how they should be applied. The opinion noted the risk to the EU’s financial systems exist because terrorist funds can appear legitimate and inoffensive in the absence of clear financial risk indicators.

The ESA recommended the EU ensures timely access to relevant information on money laundering threats from law enforcement agencies and that competent authorities should collect anti-money laundering supervisory data in a more consistent way to track overall progress.

The opinion stated that if issues are not addressed, they risk diminishing the robustness of the EU’s anti-money laundering and terrorist financing defenses.