Interview with Les Échos

Interview with Édouard Fernandez-Bollo, Member of the Supervisory Board of the ECB, conducted by Thibaut Madelin on 23 February and published on 28 February 2023

28 February 2023

What is the aim of the future EU Anti-Money Laundering Authority (AMLA)?

The fight against money laundering is an area in which working at the European level makes most sense – first and foremost for the sake of efficiency. Faced with money laundering networks that are highly adept at operating across national boundaries, we need to take a unified approach on the prevention side.

Second, AMLA will add a concrete European dimension that will benefit the banking system, and indeed bank customers. At present, anyone wishing to open an account at a European bank must complete one of 27 different types of customer identification procedures. This initiative can change day-to-day practices for both banks and their customers and help create a single European banking market.

Third, AMLA will give Europe much more influence internationally. Once we have more effective supervision and uniform standards, we will set an example in a highly international field.

What tools does it need to be really effective?

First of all it needs legal tools. The Authority will be of no help without powers. Then it needs to have effective means for exercising those powers: people, resources and data. Accessing and processing data is a huge challenge in anti-money laundering, far more so than in prudential supervision. In the latter, we look at aggregates, at banks’ balance sheets for example. Fighting money laundering is about detecting individual transactions – billions of which take place every day!

The European Commission has proposed a headcount of 250. Will that be enough?

That was the Commission’s initial proposal. I hope that there will be more staff − there are 1,300 of us in banking supervision. The number in the current text is likely to be revised up to more than 400 employees, but the EU Council wants a gradual increase.

How important is the location of the future authority?

Some places may indeed be more attractive than others, but as a European authority we are completely neutral on the subject.

Everything hinges on access to data. But in Europe isn’t that hampered by the General Data Protection Regulation or by the EU Court of Justice’s recent decision on access to the register of beneficial owners?

There is certainly an inherent tension as all data to do with money laundering are by nature confidential. Moreover, anti-money laundering began when it was decided to lift banking secrecy. The rules we have in Europe are more restrictive than those in the United States. But the Anti-Money Laundering Directive should legitimise and expand the cross-border exchange of data. The existing data are currently split across all of the national authorities, which limits the effectiveness of coordination.

It’s what we saw in the case of Danske Bank…

That’s very clear and I hope these problems will no longer arise. But to that end, AMLA’s data-sharing role shouldn’t be limited to its scope for direct supervision. AMLA will supervise only 45 institutions directly but altogether thousands of entities will be supervised by national authorities.

Such as?

Banks, payment institutions, money changers, insurance companies, investment firms and of course crypto-asset service providers. When it comes to information sharing, financial intelligence units such as Tracfin in France need to cooperate with each other. And their role goes beyond the financial system – we’re talking about tens of thousands of entities, such as casinos, lawyers or real estate agencies.

Shouldn’t we be concerned about government interference?

It’s clear to governments that they are not really managing to deal with this problem. The Danske case was very useful in a way as Denmark didn’t consider itself to be very lenient with regard to money laundering and found itself being singled out. People realised that the framework hadn’t enabled effective supervision of money laundering risks in the branch in Estonia. And then there have been so many scandals, for example in Sweden, the Netherlands… Governments want to avoid being caught off guard by a scandal and accused of not having taken the necessary steps to prevent it − they would otherwise run the risk of very serious reputational issues.

Why doesn’t the ECB take on that supervisory role?

We have a keen interest in seeing progress towards a more European approach to anti-money laundering as it’s absolutely essential in our view. But the European Central Bank is an institution governed by the Treaty on the Functioning of the European Union, which can only be modified by a unanimous decision of the 27 Member States. The Treaty says that we can’t cover insurance companies and that we can only have a prudential supervisory role. Nobody really has any desire to change the European Treaty right now. That said, we want a framework that enables us to cooperate very closely with AMLA.

Doesn’t the effectiveness really just depend on the size of the sanctions? They amount to billions in the United States but in Europe they are in the millions…

It’s true that these are two different worlds. It reflects the fact that the Americans have a very economics-based notion of sanctions whereas in Europe we have more of a culture of criminal sanctions. But we have evolved a little. In some European countries the approach involved purely criminal sanctions, with no sanctions whatsoever in the area of prevention, which is about information sharing between banks and financial investigation units. But there is still no coordinated approach.