–> This is a pre-event interview in the run-up to the Leaders in Finance Cyber AML Europe event on 29 June 2023 in Brussels.
Jeroen: Thanks a lot for taking the time to talk to Leaders in Finance in the run-up to the AML Europe event in Brussels this month, the 29th of June!
Roger: Thank you for inviting me.
Jeroen: Roger, first of all, could you briefly introduce yourself?
Roger: My name is Roger Kaiser. I am a Senior Policy Advisor at the European Banking Federation, the voice of European banks. We represent approximately 6000 banks in all the 27 member states plus Norway, Iceland, Switzerland, Liechtenstein and the UK. I am in charge of the team Tax and Compliance, where compliance includes all financial crime related issues and AML. I am a member of the steering group of the Europol Financial Intelligence public-private partnership. Another specific commitment on the tax side is that I am a member of the Tax Committee of Industry at OECD, the so-called BIAC group.
Jeroen: So you have seen a lot of changes when it comes to AML, in policy and in how things work in practice, over the years. What are the biggest changes that you have seen unfold?
Roger: A change has occurred since the first money laundering scandals and tax leaks, which started with the Panama Papers leak in 2016. In the aftermath of the Panama Papers, an increasing awareness has emerged about the threat that money laundering poses to society and to financial stability. Now, we see a lot of awareness among all public and private stakeholders – though, I would say, with a regrettable exception to the data protection authorities. Among the other stakeholders, it is amazing to see the broad consensus on the need for enhancing the effectiveness of the AML framework, and the common or similar views on how to achieve this, which is through an intelligence-led-approach.
Jeroen: What does that mean, intelligence-led approach?
Roger: It first refers to the risk-based approach. So it focuses on identifying criminal activity and risks, moving away from a “ticking boxes” approach. That is the main objective. Moreover, cooperation and exchange of information between all actors in the AML ecosystem are central to this approach. We should stop working in silos.
Jeroen: Right. So in part, this is a wish, right? This approach has not fully materialized, but you are seeing developments into that directions. Is there anything specific that you would wish to happen?
Roger: There are a number of things that we want to change, some of which are in progress. So we are waiting for the final adoption and implementation of the AML package. But as the European banking sector we are quite concerned about two issues. I have mentioned one, which is truly a stumbling block: the data protection issue. This is an element that is absolutely key, and over the last few weeks there has been some developments which are in my view highly problematic, due to what I would characterize as a dogmatic approach among data protection authorities. Of course, I fully understand that data protection is a fundamental right for citizens, but we must also strike a balance between this fundamental right and citizens’ fundamental right to live in security – as money laundering is a highly important threat to society. In my view, data protection authorities should understand this and be more flexible. Another difficult aspect which has not yet been solved and about which we are not very optimistic for the near future is related to beneficial owner transparency. The AML package includes some new rules about the design or functioning of beneficial owner registers. Despite this it mostly preserves the status quo, as there are no big changes from AMLD4 and AMLD5, so that key issues remain. The registers are designed at national level, and each jurisdiction has developed its own registers with its own technology and rules. This fragmentation across registers means that it is difficult to connect them, and to develop the operability between registers. We need another approach to this. What we also need in regards to these registers is verification of the information, which is currently not in place. Without this verification, the obliged entities, financial institutions in particular, will not be able to fully rely on the registers, and are forced to instead report on discrepancies which is highly burdensome and not necessarily highly effective. In the initial version of the sixth directive in the package, there was no development regarding the value of information in UBO registers. It is now discussed at parliament and the council and there are some proposals, so we hope that the package will be improved in this direction. So these are the pending issues, for which I see no immediate solutions.
Jeroen: That is very clear. Thank you for explaining these two major blocks: privacy and the UBO registers and related issues. You already mentioned the AML package that is coming up. You are in Brussels: where does the package stand? What is the latest and greatest on AMLA?
Roger: Particularly on AMLA as an authority, I think a current problem is that politicians are very much focusing on the seat of AMLA. I have no preference for this; what is important is that AMLA is useful, and that there are not too many overlaps between the different supervisors. One of our concerns has to do with the selection of directly supervised entities, which is still to be improved. For the first round of selections of supervised entities, my expectation is that they will rely on inherent risks which may not be that appropriate, because the focus will be placed on large entities where the risks are not necessarily the most important ones. We should focus more on marginal risks instead. I think that improvement will also come from the methodologies that will be developed by AMLA itself, but regrettably that will only be in the future.
Jeroen: And where do we stand in terms of timelines?
Roger: It is supposed to start next year and be operable in 2026. If policymakers can reach agreement on the seat, we can expect an agreement by the end of the year. That means a possible delay of one year compared to the initial calendar.
Jeroen: My last question is: the European Banking Federation is one of the partners of the Leaders in Finance AML event. You attend a lot of events during the year – is there something you particularly look forward to at this event, or are you looking for anything specific in terms of content?
Roger: You are right that there are many events on AML, it is a popular theme at the moment. I think the Leaders in Finance event is well-structured, forward-looking, and there are very good speakers. What I would love to achieve with this event is that some messages are conveyed to certain stakeholders and regulators, maybe data protection authorities, and to raise awareness about the threats and the risks that are related to financial crime.
Jeroen: Thank you so much, Roger, and I’m looking forward to seeing you on the 29th of June this year for the Leaders in Finance AML Europe event. Thank you!
Roger: Thank you too, I look forward to it!
–> This is a pre-event interview in the run-up to the Leaders in Finance Cyber AML Europe event on 29 June 2023 in Brussels.