(Bloomberg) -- European Union officials called for a further tightening of the bloc’s anti-money laundering rules after identifying a host of failures that led to scandals across the financial system.
Banks at times completely ignored requirements to stop illicit financial flows and supervisors were ill-equipped and often slow to deal with the issues, the European Commission said on Wednesday. Handing some powers to a common EU body could be one way to improve supervision and avoid a repeat of the situation, it said.
The EU’s executive arm conducted a “post-mortem” exercise after banks such as Danske Bank A/S, Nordea Bank Abp and ING Groep NV were caught up in high-profile scandals. Russian criminals often used the Baltic units of Nordic banks to channel money into the West, exploiting weaknesses in the EU’s defense against money laundering.
“We have a structural problem in the Union’s capacity to prevent that the financial system is used for illegitimate purposes,” Valdis Dombrovskis, the EU commissioner in charge of financial-services policy, said in a statement. “This problem has to be addressed and solved sooner rather than later.”
Estonia and Latvia, two EU countries that served as conduits for illicit funds, have vowed to clean up their act. But policy makers are facing a steady stream of calls for more fundamental reforms of the bloc’s framework, such as putting a Europe-wide authority in charge of fighting money laundering.
Another measure floated by the commission is to turn the EU’s anti-money laundering rules into directly applicable regulations, reducing the scope for member states to tinker with the laws. Integration of the bloc’s banking market means more work is required on developing cross-border policies, it said.
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