Denmark’s financial watchdog faces an inquiry by the European Union’s banking supervisor into how it supervised Danske Bank, which last week said it was being investigated by the U.S. Department of Justice over alleged money laundering.
The European Banking Authority has powers to make recommendations that national supervisors must follow, as it did during a probe into how Malta’s supervisor oversaw one of its banks.
He also told parliament on Monday that the EBA is launching a review into how all EU member states apply anti-money laundering rules. It will report by the end of 2018.
Danske Bank’s revelation last month that between 2007 and 2015 payments totaling 200 million euros ($230 million) flowed through its tiny Estonian branch, many of which Denmark’s largest lender said were “suspicious”, has prompted calls for an overhaul of bank supervision in Europe.
Enria also said EBA had opened a preliminary inquiry into how Latvia’s financial watchdog supervised ABLV bank which went into liquidation this year after U.S. authorities accused it of laundering money for people from the former Soviet Union.
Lawmakers on the European Parliament’s economic affairs committee questioned whether EBA was doing enough to combat money-laundering. German lawmaker Wolf Klinz said a standalone anti-money laundering (AML) agency for the EU may be needed.
“In order to contribute to more effective EU wide AML supervision, we urgently need more resources and greater clarity in EBA powers,” Enria said.
Criminal money was moving through member states but cooperation between the authorities was not up to speed, Enria said, adding that the European Commission had proposed just 10 extra staff for EBA to help with anti-money laundering work.
“We do have an EU problem. The point is how to fix it,” he said, adding that the framework for cooperation with the United States over money laundering issues was not working as well as it should.
In Malta’s case, EBA issued recommendations to Malta’s financial market watchdog over its handling of Pilatus Bank, whose chairman has been indicted for money laundering.