February 8, 2019 / 6:50 PM / 2 months ago

EU needs stronger anti-fraud curbs, lawmakers say, after Danske scandal

COPENHAGEN (Reuters) - The European Union needs tougher anti-fraud controls including a central body able to enforce laws against money laundering, European lawmakers said on Friday, describing financial crime as a security problem for the continent.

FILE PHOTO: A woman walks past Danske Bank's Estonian branch in Tallinn, Estonia, January 22, 2019. REUTERS/Ints Kalnins/File Photo

Curbs should be more uniform across the EU and its framework for swapping financial intelligence is inadequate and must improve, the European Parliament’s tax crime committee added.

Europe has been hit by money laundering scandals in recent months, including a major one at Danske Bank’s, the collapse of Latvia’s ABLV Bank, the closure of Malta’s Pilatus Bank and a 775 million euro fine imposed on Dutch lender ING.

The Financial Intelligence Units of many EU member states are “clearly not up to the task”, committee chairman Petr Jezek told a news conference in Copenhagen.

“They do not have enough personnel or resources. In some countries their independence is also in question. This (proposed change) will certainly improve the situation,” he said.

The committee has been in Estonia and Denmark this week to meet regulators, prosecutors and Danske Bank’s new management to gather material for a report with proposals for new EU legislation to combat financial crime.

There has in the past been resistance from some member states against tougher and more centralised fraud controls, especially from those states that have worked as tax havens.

The recent scandals could however mean that those times are over, said committee spokesman Jeppe Kofod.

“Something is starting to happen,” Kofod told Reuters on the sidelines of the news conference.

“Because everyone can see that, contrary to the United States, Europe has become the first destination for laundered crime money from Russia and other former Soviet Union states, and that is a problem for our security in Europe,” he said.

Danske Bank is being investigated in Denmark, Estonia, Britain, United States, and from Thursday also France, over suspicious payments totalling 200 billion euros ($228 billion) made through its tiny Estonian branch between 2007 and 2015.

The committee called for more direct EU regulation, instead of the current model where a so-called EU directive is implemented in each member state’s own laws, with many different local practices as a consequence.

The lawmakers will also propose setting up a central EU body with powers to enforce anti money-laundering legislation in cooperation with national authorities.

EU governments reached a preliminary deal in December to clamp down on money laundering by strengthening bank supervision through the European Banking Authority (EBA).

Reporting by Teis Jensen, Editing by William Maclean

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