EU to name and shame banks that fail to fight money laundering

The European Banking Authority (EBA) is setting up a centralised database to name and shame financial institutions in the EU that have weak anti-money laundering (AML) controls.

The EBA, which is responsible for creating a single rulebook for bank regulation in the EU, said the new database would be a “key tool” for coordinating the fight against money laundering and terrorist financing.

The authority is proposing to collect and store information on banks that demonstrate “weaknesses” in their AML efforts. It will also contain information on the measures that national regulators are taking to crack down on institutions that perform poorly in relation to AML.

The EBA is now seeking input from stakeholders about how to define those weaknesses and how the information about financial institutions in the database will be disseminated, both among officials and to the public.

The objective is to help regulators coordinate and allocate appropriate resources across borders for on-site inspections as well as off-site monitoring.

Bank of Ireland, AIB and Ulster Bank were fined nearly €9m in total in 2016 and 2017 for AML violations, including failure to have proper systems and controls to prevent abuse of the financial system by criminals and terrorists.

The Irish government has historically been a laggard among its peers in adopting EU AML rules into national law.

The EU’s 5th AML Directive was passed in June 2018 and was due to be implemented by all member states by January 2020. However, the Government only introduced its bill amending the existing laws in September 2020. The bill passed in March of this year.

The Central Bank said in December that financial firms were ignoring their legal responsibilities in relation to the prevention of money laundering and the financing of terrorism and leaving oversight to unqualified staff.

A supervisory review of compliance with AML regulations found that boards across the financial industry, from banks to brokers, were neglecting the rules.

Regulators sent a ‘Dear CEO’ letter to all firms in the sector warning that officials would be following up with firms that have shown weaknesses and failures in their AML/CFT regimes.


By Jon Ihle, May 08 2021