The most effective way to prevent criminal money flows is to act centrally, as in banking supervision, says Anneli Tuominen, Director of European Banking Supervision.
FRANKFURT Investing the money obtained from the drug trade in the construction industry, banks or wind power. Receipts for non-existent pizzas, car washes or kiosk purchases. Cash smuggled across borders.
All this and much more is money laundering. Money laundering means handling illegally obtained money in different ways so that the money appears to have been obtained legally. Recently, artificial intelligence and cryptocurrencies have come to the aid of criminals.
Now the EU is establishing a new anti-money laundering supervisory authority, Amla (Anti-money laundering agency) in Frankfurt, Germany. Amla is scheduled to start next year. The agency will hire hundreds of experts over the coming years. It should be ready in 2028.
The EU Parliament has just finalized the money laundering legal package in spring. It defines the uniform rules of the game for the entire territory of the Union, and Amla monitors their compliance.
A Finnish MEP played an essential role in the preparation of the law Eero Heinäluoma (sd).
Former head of the Financial Supervisory Authority Anneli Tuominen works in Frankfurt in charge of banking supervision of the European Central Bank.
Bank supervisors monitor banks’ solvency, risk management, capitalization, and overall financial position.
– When identifying money laundering, you need to understand payment traffic, matters related to money laundering legislation and customer identification, as well as how money flows, Tuominen says.
If Amla’s location had been chosen on the grounds that it already has the most effective anti-money laundering legislation and supervision, Paris or Riga would have won the race. However, Frankfurt probably came out on top becausethat banking supervision is also located there.
Football clubs have to report
According to Tuominen, the EU has wanted to keep money laundering separate from banking supervision, because other sectors of society are involved in money laundering than the banking world.
However, his subordinates cooperate with anti-money laundering authorities.
– We use information about money laundering, for example, when we review the suitability of bank board members or business license applications and see if there are any abuses related to money laundering.
Amla begins to directly supervise approximately forty institutions in the financial sector at first. Such credit and financial institutions include, for example, crypto-currency providers that are estimated to pose a high risk and that operate in at least six EU countries.
However, the new rules also apply to sellers of luxury goods such as luxury cars, jewels, yachts and airplanes.
Wealthy European football clubs also have to report their financial transactions to Amla for the first time.
Bank supervisors have written practices
According to Tuominen, it is important to get a European authority to trace money laundering, because now every country has its own different systems. It makes sense to investigate international money laundering on a transnational basis, just as the ECB’s banking supervision supervises banks.
Even before the financial crisis in Europe, it was noticed that the practices of different countries were very different. It turned out that not all banks fulfilled their obligations.
– This also applies to monitoring money laundering in the financial world. And when you think about today’s world, it is extremely important to be able to combat these criminal money flows as well.
Most recently, in the Danske Bank money laundering scandal in 2018, it became apparent that banks do not fulfill their obligations in reporting money laundering either. Danske Bank’s Estonian branch was used to launder Russian money between 2007 and 2015.
In the future, Amla will also monitor that various entities comply with the sanctions decided by EU countries, for example in monetary transactions with Russia.
– I could imagine that such an authority also has a preventive effect. Is it the main thing to find those cases? In my opinion, not necessarily, but the main thing is that money laundering would not happen.
Is it to be assumed that Finnish experts also work at Amla?
– Unfortunately, we have few Finns on the ECB’s bank supervision side. So I would hope that there would be more of them, because Finnish know-how is needed.
The application period for the office’s director general just ended. Next, we will start looking for experts familiar with money laundering.