Massive new workload for AMLA and Europe’s banks as MEPs pile on sanctions pressure, is the EU setting up the agency for failure?

THIS week has seen two significant developments on the European sanctions front. First came the new Directive which makes sanctions evasion a criminal offence right across the 27 Member States. Then came the announcement that the new #AML Authority (AMLA) will have a role overseeing European banks' sanctions models and ensuring they are sanctions compliant. Apart from the fact that this a huge new responsibility for an already over-burdened and not yet nascent agency, it also has other implications right thru the banking and financial system. Taking it to its ultimate conclusion, could we see senior bank or crypto executives now charged with crimes where lack of sanctions oversight has been found?

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The sanctions role for #AMLA can be seen as a victory for the European Parliament, where MEPs have long been pushing for action on sanctions enforcement. Despite resistance from national governments and the European Commission the parliamentarians held sway. But it’s hardly a victory for AMLA, which still isn’t rooted in firm legislation, doesn’t have a boss or staff – or even a headquarters location but is burdened with massive responsibility. Let’s just list what it must now do:

• Directly supervise 40 of EU’s riskiest banks
• Directly supervise at least one bank in every Member State
• Oversee VASPs
• Co-ordinate national supervisors
• Co-ordinate national FIUs
• And now oversee the response of the EU’s banks to sanctions

Serious question: Is the EU setting AMLA up for failure?

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In the US?the?Office of the Comptroller of the Currency on Thursday published two more consent orders, one directly related to AML issues and one that most likely has some underlying issues re. AML, but more focused on third-party risk management. Our columnist Sarah Beth Felix looks at the implications of the orders for US banks.

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Back in Europe seven suspected were arrested Thursday in Italy and Germany as part of coordinated action against money laundering through fake long-term rentals of luxury cars. Investigations by authorities in the two countries started in 2019, Eurojust said in a statement, adding the alleged criminal network's proceeds that were being laundered stemmed from drug trafficking, extortion and illegal betting on behalf of other criminals. The operation was led by Eurojust, the EU Agency for Criminal Justice Cooperation. We report.

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At a conference in Korea, Steven Maijoor , the Director of Financial Markets at De Nederlandsche Bank, sounded a cautionary note to the crypto community, warning that "all that glitters is not gold in crypto-assets." His insights once again highlighted the risks inherent in crypto investments and stressed the critical need for global cooperation.?

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Still in the Netherlands, the national #FIU revealed how a seemingly routine request for information led to the takedown of a €6M criminal underground bank.?

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Now here are news updates for the week so far:

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SANCTIONS EVASION BECOME EU-WIDE CRIME:?The law lays down that member states will need to define certain actions as criminal?offences. Trade with war material would constitute a criminal offence not only when committed intentionally but also if committed with serious negligence. The new EU directive “ensures that those who violate or circumvent EU sanctions will be prosecuted,” the European Council said. “This gains particular importance in the context of the Russian war of aggression against Ukraine,” the Council added.

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HOW WILL AMLA OPERATE:?THE BUILDING out of Europe's new AML Authority (AMLA) took another, this time decisive, step?forward?overnight. Europe's governments and the European Parliament agreed on the scope and legal basis for the authority. So how will the agency work in practice? It's now agreed AMLA will have direct and indirect supervisory powers over high-risk obliged entities in the financial sector.

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?AMLA'S ROLE IN POLICING SANCTIONS EVASION:?EUROPE’s new AML Authority (AMLA) will play a role in?policing?sanctions evasion, it was agreed overnight at marathon talks. Negotiators from the European Parliament and European Council agreed that AMLA should supervise the circumvention of targeted financial sanctions like the ones included in the 11 sanctions packages approved by the EU against Russia. The legislation and scope of AMLA were finalised at the “Super Tuesday” talks – but critically failed to agree on how to decide its location.

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AML LESSONS FOR US BANKS: THE Office of the Comptroller of the Currency published two more consent orders today (Thurs) – one directly related to AML issues and one that most likely has some underlying issues re. AML, but more focused on third-party risk management. Both of these banks have some type of BaaS/fintech offerings. And both will have to undertake some significant steps to get out of these orders. On the order for B2 Bank that is directly related to AML shortcomings, and it is pretty unique. This bank has less than $100MM in assets. Community banks, listen up. Risk Assessment shortcomings take up pp. 11-14 of the order… which is a little confusing to me for a few reasons: ?

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RENTAL CAR MONEY LAUNDERING:?SEVEN people have been arrested in Italy and Germany as part of coordinated action against money laundering through fake long-term rentals of luxury cars, #Eurojust, the EU Agency for Criminal Justice Cooperation, said today (Thursday). Investigations by authorities in the two countries started in 2019, Eurojust said in a statement, adding the alleged criminal network’s proceeds that were being laundered stemmed from drug trafficking, extortion and illegal betting on behalf of other criminals.

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CRYPTO CAUTION:?Director of Financial Markets at De Nederlandsche Bank, Steven Maijoor?delivered?a warning to the crypto community and investors, that "all that glitters is not gold in crypto-assets." His remarks at a conference in Korea focused on the risks associated with crypto investments and the critical need for global cooperation. Maijoor commenced his speech by unveiling the parallel between crypto adoption rates in the Netherlands and South Korea.

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DUTCH FIU ARRESTS:?THE DUTCH FIU has revealed how a?request?for information led to the takedown of €6M criminal underground bank. The federal police today said the information led to the arrest of a Dutchman on the Spanish holiday island of Ibiza where he allegedly moved more than €6M. The suspect from Haarlem was apprehended on November 21 as part of an investigation initiated by the North Holland police on January 23, 2023.

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CROWN FACES PROBE:?Blackstone-owned Crown Resorts is facing an?investigation?by an Australian state regulator after the casino operator said it was probing into CEO Ciaran Carruthers, who allegedly overruled the casino's security officers over banning intoxicated customers. "In relation to the CEO's conduct, the Victorian Gambling and Casino Control Commission (VGCCC) will review the outcome of Crown's investigation into its CEO before determining what, if any, regulatory action may be taken," the sector regulator for the state of Victoria said in a statement on Wednesday. Local media reports emerged around the investigations, speculating that a minor was also allowed on the game floor.

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Have a great Friday ??

Stephen?and the team at AMlintelligence.