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Report exposes gaps in EU's anti-money laundering drive

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Report exposes gaps in EU's anti-money laundering drive

A confidential report by European Union regulators has revealed shortcomings and gaps in the bloc's anti-money laundering measures, the Financial Times reported Sept. 5.

The report, prepared by EU financial supervisors and sent to national governments and the European Parliament week of Sept. 3, exposed the lack of legal clarity on how different types of financial supervisors are supposed to work together; the sketchy arrangements for information-sharing between EU countries; and the lack of EU resources to ensure the proper enforcement of the rules, the FT, which saw the report, said.

The report noted that the European Banking Authority, which is responsible for implementing EU banking regulations, has the equivalent of 1.8 full-time staff working on money-laundering issues. Including EBA sister units dealing with markets and insurance, the figure was 2.2.

"There are shortcomings with respect to cooperation and information-sharing, both at domestic level between different authorities and across borders in other EU member states," the report said.

EU officials said that while many responsibilities for banking supervision have been placed at the European level, the enforcement of anti-money laundering standards remained at the national level.

The report comes after a recent investigation found that up to $30 billion of Russian and ex-Soviet funds allegedly passed through Danske Bank A/S's Estonian branch in 2013, igniting concerns that the bloc was failing to keep illicit funds from flowing into its banking system.

The report said the bloc could draw up a "memorandum of understanding" on data-sharing between national conduct regulators and the European Central Bank, which directly supervises the eurozone's lenders.

The paper also raised the idea of centralizing responsibilities currently spread between different EU authorities with the EBA. A long-term option would be to establish an EU-level "mechanism" to better coordinate the work of national supervisors or centralizing anti-money-laundering supervision through an existing or a new union body.