An action plan for Europe on AML – why is it needed?

24 June 2020: The EU Commission has published an action plan that addresses anti-money laundering (AML) and terrorism financing. Insights finds out more from Sophie Wales.

An action plan for a comprehensive Union policy on preventing money laundering and terrorism financing has been published by the European Commission. It builds on the findings of the anti-money laundering package of 2019, which highlighted fragmentation of rules, uneven supervision and limitations in the cooperation among financial intelligence units across the EU.

Sophie Wales, ICAEW Head of Ethics and Economic Crime, answers our questions about the action plan.

Why has the European Commission produced an AML action plan?

SW: The EU financial system has suffered a number of money laundering scandals, which has identified that AML standards may not be universally applied across Europe. In response, the EC has formulated a plan that seeks to address any gaps in the regime.

What does the plan propose?

SW: The action plan, which launched on 7 May[SW1]  2020, sets out the areas the EC will seek to address, which include:

• better enforcement of existing rules;
• revision of the anti-money laundering rules where needed; and
• an overhaul of the EU’s supervisory and enforcement regime, including the possibility of a single European regulator for AML.

What are our views on the proposals?

SW: We support the aim of the proposals, but as with most AML regimes, much of the detail is heavily focussed on banking and financial institutions. The accountancy sector has an important part to play in preventing and detecting money laundering, so any regime needs to cater for the profession, rather than just a one-size-fits-all approach.

The core of the action plan is rooted in compliance and harmonisation of standards. While compliance with standards by regulated professionals is important, it isn’t sufficient on its own to prevent money laundering. There is a need to bring the fight to the criminals through closer working between the professions and law enforcement, including cross-border intelligence-sharing throughout Europe.

Global co-ordination is also important, as many attacks on EU banks and businesses originate outside of Europe. Crime doesn’t respect national borders.

What are the likely timescales for action?

SW: The European Commission published a consultation on its AML action plan on 7 May 2020. We expect the EC to reflect on the responses to that consultation and then propose a raft of detailed policy measures in early 2021.