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It has been revealed that the new AML Authority for Europe (AMLA) may also be responsible for enforcing sanctions across the EU.
According to the proposals, AMLA would have authority on par with that of powerful US Treasury agency, OFAC. If approved, the sanctions function would probably double the €200 million budget and 250 employees currently designated for AMLA.
The announcement comes as Commission representatives observe how the EU is having difficulty enforcing the variety of current and upcoming sanctions against Russia due to the invasion of Ukraine.
Financial Service Commissioner Mairead McGuinness has acknowledged that her staff was considering various options. This included the potential creation of an EU equivalent to the Office of Foreign Assets Control (OFAC), the main US Treasury organization in charge of enforcing sanctions.
However, the Commission is also considering giving AMLA the authority to impose sanctions.
The fact that it would only involve amending legislation that is already before the European Council and Parliament, meaning it could be fast-tracked, would make this easier for officials.
In a media interview, Commissioner McGuinness also seemed to back this choice. “Anything that would help member states implement [sanctions], and where we see European oversight and co-ordination . . . would be a plus,” according to Ms. McGuinness.
“The idea of having an overarching view of sanctions and their implementation is one I would support.”
According to her, the commission has written to several member states asking them to provide information on how they are carrying out the EU's sanctions against Russia.
She claimed that the sanctions had been strongly implemented across 27 different ways of doing business and that the EU had made "extraordinary progress" in developing them and coordinating them with international partners.
However, she noted that “in some countries there’s a strong infrastructure on sanctions implementation and others not so.”
Uneven enforcement has hampered EU sanction policy. National authorities in the 27 member states are responsible for putting any proposed measures into effect after being approved by all EU capitals. The European Commission only makes the proposals.
John Berrigan, the Director General of DG FISMA, the Commission's financial services division, recently discussed the Commission's approach to the implementation of sanctions.
He referred to the implementation and harmonisation gaps that have plagued Europe's fincrime response for years and said there were uncomfortable similarities between what we see here [in sanctions] and AML.”
While Europe had passed the laws, there were issues with the sanctions' implementation because it was up to the national governments.
It was evident that the ways in which Member States approached this subject varied greatly.
Violations of sanctions were administrative offenses in some countries while they were criminal offenses in others.
Because of this, the Commission last week released legislation that will make sanctions violations a crime throughout the Union.
In order to formally exchange information and best practices, DG FISMA established working groups of the Member States and was in charge of coordinating the sanctions. It was not, however, a sanction supervision body.
Peer pressure was another factor mentioned by Mr. Berrigan in this process.
Additionally, the DG FISMA handled sectoral sanctions against banks and other businesses, while the EEAS, the director of foreign policy for the EU, handled sanctions against specific people.
The proposed regulation establishing AMLA has recently been amended by MEPs from the Renew Europe group.
These would establish a brand-new "central office" in charge of managing national agencies that implement specific financial sanctions, giving the proposed EU agency duties like intelligence gathering and coordination.
In the meantime, the Commission was also thinking about making sanctioned entities disclose their assets or face criminal charges if they tried to do so. Additionally, it was considering standardizing definitions, such as what constituted control over a sanctioned entity, as well as expanding asset ownership registers.
According to Ms. McGuinness, Brussels was also collaborating with financial institutions to make sure they did not go over the limits set by sanctions when "de-risking" business relationships.
While it is commendable that banks want to abide by the sanctions, the issue arises when people are caught up when they should not be, such as Russians living in Europe who are prohibited from opening bank accounts, she claimed.
She continued, "I think with our guidance and the work we’re doing with both the financial institutions and the member states, these things should clear up in time. There may be some problems, but they won’t persist."
By fLEXI tEAM