AbleToTrain by Willing & Able

Recent financial scandals have re-emphasized the magnitude of the struggle that remains in the battle against corruption. Global Insight argues for more collaboration, transparency, and global standards. One of Europe’s most prestigious financial organizations liquidated its Estonian branch in October, putting an end to one of the world’s largest money-laundering scandals. Danske Bank’s €200 billion scheme has already taken its toll, prompting CEO Thomas Borgen and several top executives to retire. In Denmark, Estonia, France, and the United States, criminal investigations into the bank’s and its senior executives’ behavior have been begun. Other large international banks have also been named as suspects.

Danske Bank’s chairman, Karsten Dybvad, admitted in a statement that the firm had done “too little, too late,” but added that the bank was already working on methods to avoid repeating history. ‘As a result of the lawsuit, we have strengthened our business operations, monitoring, and controls, and we have spent a significant amount of money on anti-money laundering [AML] measures, personnel training, and IT infrastructure upgrades.’ A slew of money laundering investigations involving banks across the European Union indicates that the region is still a haven for dirty cash.

To combat illicit financial flows, stronger regulation, legislation, and compliance procedures are plainly needed. But there’s another issue: no matter what laws and rules are in place, enforcement agencies are failing to hold the business world accountable. Eva Joly is a former anti-corruption magistrate, a French MEP, and the Vice-Chair of the Luxleaks and Panama Papers Commissions of Inquiry. According to her, such disclosures have revealed the magnitude of the financial system’s malfeasance. ‘It’s proven that it’s a business,’ she says. ‘That people profit from money laundering and set up what the law requires them to set up, but that they find ways to avoid complying.’

Recent money laundering events have served as a stark warning to businesses. Since the Danske Bank crisis, firms have become much more aware of money laundering, especially if people are investing in very small correspondent banks. ‘A lot of firms are striving to clean up their frameworks because they know it will provide them with an auditable or traceable mechanism to remedy these issues if they arise.’ There are now attempts to look under the hood of some of Europe’s smaller banks from an anti-money laundering standpoint.’

The European Parliament passed a resolution in September encouraging the European Commission to resurrect a blacklist of non-EU nations that are allegedly refusing to cooperate in the fight against money laundering. The grouping proposed ideas in October for a new, centralized anti-money laundering authority to supervise AML compliance at financial institutions. The European Banking Authority’s ability to combat money laundering was already bolstered earlier this year when it was given new powers to compel national agencies to probe suspected AML violations. These actions imply that some significant efforts are being made to overcome the enormous disparities in skills, resources, and willingness to combat corruption among the EU’s 28 member states.

According to Robert Amaee, Director of Amaee Law and former head of Anti-Corruption & Proceeds of Crime at the UK’s Serious Fraud Office, “it’s uncertain whether a Europe-wide regulatory agency would do anything to ramp up enforcement on a national level” (SFO). ‘I don’t believe anyone would argue against more cooperation and coordination on such issues,’ he says. ‘It appears to me that this proposal is in its early stages of development, and its usefulness or lack thereof will be determined by the details and processes that can be agreed upon by the numerous EU States with their own national interests and diverse AML regimes.’

Former head of Transparency International’s UK Chapter, Robert Barrington, says that there are compelling reasons for an overarching regulator to hold Europe’s financial institutions in check. ‘One of the missing aspects of dealing with money laundering entirely on a local basis at the moment is that it leaves it exposed to criminals exploiting discrepancies and loopholes between jurisdictions,’ adds Barrington. ‘To be honest, one of the UK system’s flaws is that there are still over 25 different bodies responsible for money laundering regulation. Some of these have an overarching supervisor, but there is still inconsistency, and certain professions self-regulate as a result.’