A critical analysis of the governance of anti-money laundering supervision in Europe with a specific focus on the banking sector : is there the need for reform?

Abstract

Over the years, the European Union has made substantial efforts to enhance the Anti- Money Laundering and Combatting the Financing of Terrorism legal framework which establishes various measures to prevent the European financial system from being misused by criminals. It is suggested however that the same efforts were not equally supplemented with a consolidated approach in the supervision of anti-money laundering and counter-terrorist financing. There is a growing concern that the European Union is ineffective and complacent when dealing with combatting Money laundering and Terrorism Financing on a pan-European or trans-national level. This concern has intensified in view of the recent bank money laundering cases within the EU and also the various revelations exposed by the Panama Papers, Swiss Leaks and Luxembourg Leaks. This has exposed a substantial weakness in the supervision of EU banks which makes them susceptible to misuse by criminals, terrorists or tax evaders. It is clear that the increased cooperation and exchange of information between national competent authorities’ co-operation with central European authorities is not sufficient, as currently the ultimate responsibility for supervision remains at the discretion of national competent authorities. Therefore, this dissertation will firstly delve into the recent legislative developments highlighting however the limited measures introduced in relation to anti-money laundering supervision. Moreover, it will give an overview of a number of recent credit institutions failures and an analysis of some common factors between them, together with an observation of several underlying issues that exist in the current anti-money laundering supervisory structures of those member states within which these banks were established. Finally, this dissertation will examine the current anti-money laundering supervisory powers of relevant European institutions and analyse the implications of creating a European central anti-money laundering supervisor for the banking industry, and possibly also for the whole financial services industry.