REGULATORY SCRUTINY BOARD OPINION Anti-money Laundering Package

EUROPEAN COMMISSION
4/12/2020
SEC(2021) 391
REGULATORY SCRUTINY BOARD OPINION
Anti-money Laundering Package
{COM(2021) 420-423}
{SWD(2021) 190-191}
Europaudvalget 2021
KOM (2021) 0420 - SEK-dokument
Offentligt
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This opinion concerns a draft impact assessment which may differ from the final version.
Commission européenne, B-1049 Bruxelles - Belgium. Office: BERL 08/010. E-mail: regulatory-scrutiny-board@ec.europa.eu
EUROPEAN COMMISSION
Regulatory Scrutiny Board
Brussels,
RSB
Opinion
Title: Impact assessment / Anti-money laundering package
Overall opinion: POSITIVE
(A) Policy context
Money laundering is the processing of criminal monetary transactions in order to appear
legitimate. The EU has been combating money laundering and terrorist financing for thirty
years. During this time, the EU’s regulatory framework has evolved significantly. There
have also been international recommendations from the Financial Action Task Force
(FATF). Between 0.7 and 1.3% of EU GDP is estimated to involve suspect financial
activity. However, only a minor share is detected and only 1% of assets are confiscated.
The Commission revised the anti-money laundering (AML) framework in 2018. However,
recent high-profile cases led to an action plan in May 2020, which proposed further action.
This impact assessment aims to increase the effectiveness of rules, supervision and
enforcement. It will also extend the scope of activities covered.
(B) Summary of findings
The Board notes the useful additional information provided in advance of the
meeting and commitments to make changes to the report.
The Board gives a positive opinion. The Board also considers that the report should
further improve with respect to the following aspects:
(1) The main body of the report does not present the available political choices
pertaining to certain implementing options.
(2) The report does not sufficiently assess compliance costs and the simplification
aspects of the initiative.
(3) The report is not clear enough about how ‘future proof’ the preferred option is.
(C) What to improve
(1) The report should better present the political choices related to certain implementing
options developed in the annex (e.g. strengthening the international dimension,
interconnection of bank account registers for AML and law enforcement authorities, cash
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limits). Available implementing choices should be briefly introduced in the main body of
the report, while keeping the substantive analysis in the annexes. The latter should be
presented in a more structured way, around the problems, options and their impacts, clearly
indicating the preferred way forward.
(2) The report should more clearly present the envisaged simplification measures (REFIT)
and the overall impacts on compliance costs. This should involve a better identification of
costs and differentiation according to type of remunerators. Costs (and benefits) should be
quantified to the extent possible and summarised in Annex 3.
(3) The report should more clearly assess the evolving nature of money laundering
techniques and how this will challenge the flexibility of the AML framework. The report
could highlight how risk scenarios will be updated and how this will direct the scope and
depth of supervision. The report should clarify who will be responsible for the updates and
the development of the risk assessment tools.
(4) The policy context could be improved by stressing more clearly the distinction between
prevention and enforcement. The report should clarify how better prevention can help law
enforcers focus on the most relevant cases and build better cases.
(5) The report should clarify to what extent it follows the advice of the European Banking
Authority and the recommendations of the FATF.
The Board notes the estimated costs and benefits of the preferred option(s) in this
initiative, as summarised in the attached quantification tables.
Some more technical comments have been sent directly to the author DG.
(D) Conclusion
The DG may proceed with the initiative.
The DG must take these recommendations into account before launching the
interservice consultation.
Full title The package of Commission legislative proposals regarding
Anti-Money Laundering and Countering of Financing of
Terrorism (AML/CFT), and law enforcement
Reference number PLAN/2020/7886 PLAN/2020/7907 PLAN/2020/7908
PLAN/2020/7909
Submitted to RSB on 04 November 2020
Date of RSB meeting 02 December 2020
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ANNEX – Quantification tables extracted from the draft impact assessment report
The following tables contain information on the costs and benefits of the initiative on
which the Board has given its opinion, as presented above.
If the draft report has been revised in line with the Board’s recommendations, the content
of these tables may be different from those in the final version of the impact assessment
report, as published by the Commission.
SUMMARY OF COSTS AND BENEFITS
Increased effectiveness of AML/CFT rules, consistent supervision across the internal
market and efficient exchange of information among FIUs is the main objective of the
initiative. This should reduce the quantity of illicit funds which are laundered or used to
finance terrorism, either through greater detection or deterrence.
OBJECTIVE 1 – STRENGTHEN EU ANTI-MONEY LAUNDERING RULES, ENHANCE THEIR
CLARITY AND ENSURE CONSISTENCY WITH INTERNATIONAL STANDARDS
Preferred Option – Ensure a greater level of harmonisation in the rules that apply to
entities subject to AML/ CFT obligations and the powers and obligations of supervisors
and FIUs.
I. Overview of Benefits (total for all provisions) – Preferred Option
Description Amount Comments
Direct benefits
Harmonisation of rules that
apply to entities subject to
AML/ CFT obligations
A detailed and coherent rulebook for entities
subject to AML/ CFT requirements across the EU
Removal of barriers to the Internal Market
Lower compliance costs for cross-border obliged
entities
Higher legal certainty
Businesses would benefit by the creation of
a level playing field as regards rules and
obligations applicable to entities subject to
AML/ CFT requirements, i.e. CDD and BO
obligations. Lower compliance costs over
time, in particular for cross-border obliged
entities
Competent authorities would benefit from
an enhanced capacity and more efficient
execution of tasks
A consistent beneficial
ownership (BO)
transparency regime
Improved identification of beneficial owners
across the EU
Citizens right to privacy would continue to
be ensured through consistent rules on
collection and storing of BO information in
central registers and the existence of
safeguards for accessing this information
Consistent powers and
obligations of AML/ CFT
supervisors across the EU
Removal of barriers to operating in the Internal
Market
Higher legal certainty
Supervisors would be granted a minimum
set of powers. Such powers would be clear,
binding at EU level and allow adequate
exercise of supervision for all supervisors
Obliged entities would benefit from a
consistent definition of the criteria and
thresholds for sanctions.
Consistent powers and
obligations of FIUs
Better detection of cross-border suspicious
transactions
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Indirect benefits
Greater cooperation among
EU AML supervisors and
other national competent
authorities
Improved application of AML/CFT rules and
greater detection of suspicious transactions
Greater cooperation of EU
AML supervisors and
national competent
authorities with designated
EU supervisor
II. Overview of costs – Preferred option
Citizens/Consumers Businesses Administrations
One-off Recurrent One-off Recurrent One-off Recurrent
Harmonis
ation
rules that
apply to
entities
subject to
AML/
CFT
obligation
s
Direct costs
Adjustment
costs to the new
framework
Adjustment
costs
through
modificatio
n of
procedures,
tools and
human
resources
Indirect costs
OBJECTIVE 2 – IMPROVE THE EFFECTIVENESS AND CONSISTENCY OF ANTI-MONEY
LAUNDERING SUPERVISION
Preferred Option – Direct supervisory powers over selected risky entities in the financial
sector subject to AML/ CFT requirements and indirect oversight over all other entities.
I. Overview of Benefits (total for all provisions) – Preferred Option
Description Amount Comments
Direct benefits
Direct supervision of
selected entities by an EU
supervisor and indirect
oversight over all other
entities
For directly supervised entities, especially cross-
border groups, advantage of dealing with one
single AML/CFT supervisor.
National supervisors would be relieved of
the burden of supervising entities selected
for direct EU supervision.
Supervised entities would benefit from
harmonised EU-level supervision, rather
than being subject to divergent national
approaches
Indirect benefits
Indirect supervision and
coordination of national
AML supervisors
More coherent and harmonised practices among
national supervisors
Supervisors would benefit from greater
coordination.
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II. Overview of costs – Preferred option
Citizens/Consumers Businesses Administrations
One-off Recurrent One-off Recurrent One-off Recurrent
Direct
supervision
of selected
entities by a
designated
EU
supervisor
Direct costs
EU supervision
funded through
recurrent fees
levied on
supervised
entities
Indirect costs Potential
movement
of staff from
national to a
EU
supervisor
OBJECTIVE 3 – INCREASE THE LEVEL OF COOPERATION AND EXCHANGE OF
INFORMATION AMONG FINANCIAL INTELLIGENCE UNITS
Preferred Option – The EU FIUs’ Platform to become a mechanism as part of the AML
Authority, with power to issue guidance and technical standards and to organise joint
analyses and training, carry out trends and risk analysis.
I. Overview of Benefits (total for all provisions) – Preferred Option
Description Amount Comments
Direct benefits
Coordination and support of
EU FIUs through the
mechanism
Better information exchange on emerging AML/
CFT risks and trends.
Higher level of expertise among staff in national
FIUs thanks to intensified exchanges of practices
and experiences.
FIUs would benefit from better information
exchange by carrying out joint analyses and
training.
Strong support and coordination of national
FIUs through a dedicated Secretariat.
Development of common
reporting standards,
templates and non-binding
guidance
Facilitation and reduced cost of reporting. Obliged entities benefit from improved
feedback.
FIUs benefit from better cooperation, more
effective information flow, comparable data
and operational capacity development
through peer reviews.
Indirect benefits
Development of common
reporting standards and
templates
Facilitation of cooperation among FIUs. Cooperation with other competent (non-
FIU) authorities enhanced.
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II. Overview of costs – Preferred option
Citizens/Consumers Businesses Administrations
One-off Recurrent One-off Recurrent One-off Recurrent
Coordination
and support
of EU FIUs
through the
mechanism
Direct costs
Setting up
an FIU
mechanism
within the
AML
Authority
Operating an
FIU
mechanism
within the
AML
Authority
Indirect costs
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Electronically signed on 04/12/2020 11:24 (UTC+01) in accordance with article 11 of Commission Decision C(2020) 4482