The recent leak of the Pandora Papers has brought the issue of fighting money laundering back to the fore. The European Economic and Social Committee (EESC) discussed this issue at a recent conference, in which the participants assessed the European Commission's new legislative package establishing a new ad hoc EU anti-money-laundering authority.
The scale and impact of money laundering remain very high, despite the efforts made by the EU and many governments and the entry into force of major European legislative acts. Money laundering poses a clear threat to the public, democratic institutions and the financial system, and the EESC has long been calling for the fight to curb money laundering to be stepped up as a matter of urgency.
In an attempt to take stock of the state of play, the EESC and its Section for Economic and Monetary Union and Economic and Social Cohesion (ECO) organised an event on 5 October 2021 to debate, in particular, the legislative proposals tabled by the European Commission in July 2021 to strengthen the EU's rules on anti-money laundering and countering terrorism financing (AML/CFT).
The anti-money-laundering legislative package includes, amongst other elements, the creation of a new EU authority to fight money laundering, full application of the EU AML/CFT rules to the crypto sector, and an EU-wide limit of EUR 10 000 on cash payments.
Highlighting the severity of the problem, the ECO president Stefano Palmieri said:
The recent Pandora Papers leak makes it all the more necessary to take action at European level against money laundering. To effectively fight money laundering, the EU and Member States have to provide the necessary financial and human resources and step up cooperation between competent services.
Alexandra Jour-Schroeder, Deputy Director-General from the European Commission's DG FISMA, added that the EU had now changed gears towards a much tougher framework, because money laundering and financing of terrorism remained a very preoccupying phenomenon worldwide and several scandals had been witnessed in a number of EU Member States in recent years, often with a cross-border element.
Along the same lines, Aljoša Feldin, who is currently chairing the Working Party on anti-money laundering and countering the financing of terrorism on behalf of the Slovenian presidency of the Council of the European Union, referred to the importance of fighting this problem, describing it as a priority for the Slovenian presidency.
On the side of institutional and expert views, Eckhard Binder, of the European Parliament's Parliamentary Research Service, pointed out that the European Parliament had long been pushing for improvements in this area, against fragmentation of rules and in favour of better coordination of and support for financial intelligence units.
Marcus Pleyer, from the Financial Action Task Force (FATF), highlighted that the anti-money-laundering legislative package would strengthen the EU's global leadership on financial integrity by further harmonising the rules and at the same time setting up a new supervisory body, which could act as a powerful watchdog to increase the power and credibility of the EU in this area.
Karel Lannoo, representing the Centre for European Policy Studies (CEPS), stressed that the key issue in detecting money laundering was public-private cooperation and that this required well-functioning public-private partnerships.
On the subject of blockchain, Shikha Mehra, speaking on behalf of Mainchain Research & Consulting, maintained that it did not make sense to apply surveillance-based rules that had been set up for centralised traditional money flows to this new area, as crypto assets were managed in a decentralised manner.
With reference to civil society and stakeholder views, Matthieu Méaulle, representing the European Trade Union Confederation (ETUC), emphasised that the new Commission's package lacked a support and cooperation mechanism between national supervisory bodies. He also underlined that two thirds of the companies revealed by the Pandora Papers were outside the EU, in the British Virgin Islands, making international cooperation necessary.
Wim Mijs, from the European Banking Federation (EBF), stated that money laundering was much more than white collar crime, being a pivotal mechanism which provides organised crime gangs and terrorist organisations with resources to commit their crimes and to profit from them.
According to Olivier Boutellis-Taft, of Accountancy Europe, the Pandora leaks put the focus of the debate on the general functioning of the economy and the amount of money that is hidden from society; he said it would be essential to invest not only in security but also in education and sustainability, which he called the biggest challenge facing humankind.
In conclusion, Javier Doz Orrit, rapporteur for the ongoing EESC opinion on the anti-money-laundering legislative package, said that the Commission's proposals had to help to reduce the scandalous scale of money laundering in the EU, but that it was necessary to further tackle money laundering taking place via warehouses, gambling and real estate, and he called for an end to the use of shell companies.
These words were echoed by Benjamin Rizzo, co-rapporteur for the same opinion, who stressed that the new anti-money-laundering package would prepare the ground for a new way of stopping money laundering in its broadest sense.