Bank of Lithuania calls for a uniform EU-level approach to fight money laundering

Thursday 1 October 2020 13:25 CET | News

The Bank of Lithuania has evaluated EU’s proposal for a common supervisory framework (mechanism) and calls for a uniform EU-level approach to fight money laundering.

On 7 May 2020, the European Commission adopted an action plan for a comprehensive Union policy on preventing money laundering and terrorist financing and launched a public consultation. The action plan builds on six pillars, including developing a single EU rulebook for combating money laundering and terrorist financing and creating an EU level supervisory framework (mechanism).

According to the Bank of Lithuania, common rules, especially in such areas as know your-customer (KYC) requirements, would bring more clarity both to financial market participants and supervisory authorities.

Currently, rules and requirements for market participants as well as supervisory practices in EU Member States may vary, which gives rise to numerous questions concerning their treatment and uniform application. A common approach, possibly in the form of regulations, would help to tackle this issue.

When evaluating the proposal for a common supervisory framework (mechanism), the Bank of Lithuania suggests following the step-by-step approach. Firstly, there is a need to agree on a convergence of specific supervisory rules, to implement that agreement to the full and only then make decisions on the creation and scope of a common supervisory framework (mechanism).

Before adopting any specific decisions, it is first of all important to agree on which entities would be subject to EU-level supervision and only then look for an appropriate institutional solution. The Bank of Lithuania believes that in the near future it is best to focus on supervision of financial institutions, while in the longer term there could be a shift to universal supervision (subject to an assessment of needs and threats) that might also cover the non-financial sector.

Moreover, the capacity of existing EU-level supervisory authorities should be used as much as possible. Should a new authority be established, it is important to ensure that it does not duplicate the work of national supervisory authorities, does not give rise to disproportionate administrative costs, and strikes a good balance between national and European responsibilities.

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Keywords: Bank of Lithuania, KYC, money laundering, compliance, regulation, payments, banking, fraud prevention, entities
Categories: Securing Transactions | Digital Identity, Security & Online Fraud
Countries: Lithuania
This article is part of category

Securing Transactions