The European Commission is not happy with the levels of domestic implementation of various AML/CTF measures in Member States. It has carried out research and issued a Communication and several reports. Key conclusions are:
- a supranational risk assessment has identified 47 high risk products and services, including 7 new entries from the last update, such as privately-owned ATMs, football and “golden passports”. The Commission calls on Member States to implement its recommendations urgently, to ensure they have implemented MLD4 and to implement MLD5 by 10 January 2020 as it requires;
- there are significant shortcomings that have led to AML cases involving banks, usually linked to poor compliance, governance failures, misalignments between risk appetite and risk management and ineffective supervision at a group level. This is exacerbated by inconsistent domestic application of AML rules and the tendency of regulators to intervene only when a problem was noted; and
- Some FIUs can do a lot to improve the quality of SARs they receive and their interaction with those who report.
The Communication hints that if Member States do not improve their frameworks, the next AML legislation may have to take the form of a Regulation.
The Commission has also released its staff Working Document explaining its approach and the background to its conclusions.