Lean and clean: Europe’s coordinated fight against money laundering

Hello everyone.

It is great to see so many of you here today: 60 representatives from more than 30 supervisory authorities. You come from all over Europe, but you are united in the fight for a clean financial system. A system that is free of dirty money. Free of criminal money. A system that we want to keep as clean as possible, though – sometimes – this proves to be hard.

Because dirty money never stops trying to become clean again. And if that happens successfully, that is, of course, not a good thing – for the very simple reason that it undermines trust. Trust in in the integrity of our financial system, trust in our rule of law, trust in the safety of our society.

Our joint end goal is simple: crime should not pay. Not in any way. Ever.

Over the years, financial gatekeepers, such as banks and payment service providers, as well as non-financial gatekeepers, such as  lawyers, accountants and auditors, have increased their efforts to keep the financial system clean. They have become stricter at the gate, they have started to investigate their customers more intensively, and they have built their KYC and compliance teams. 

These measures were taken at varying speeds – with some going faster than others, and with some still at the beginning of this process. But all of these measures are necessary. And they will remain so. Because criminal money will always try to find new ways to get in.

The flipside of these measures, as we have noticed, is de-risking –sometimes, these very measures hinder the basic services of, for instance, banks. Sometimes, they make it more difficult for certain businesses or private customers to have access to banking services, like opening a bank account. Sometimes, they even lose that access.

That is, of course, not something we want for clean customers.

Against this backdrop, DNB drafted the report ‘From Recovery to Balance’ in 2022. In this report, we addressed the question of how banks and supervisors, each in their role, can level up their fight against money laundering and terrorist financing. To keep the financial system clean, without unnecessarily holding things up.

In our report, we emphasise a shift towards a risk-based approach in financial crime prevention. With this approach, one focuses on identifying and prioritising the highest risks, which then allows for a more efficient allocation of resources.

Additionally, this approach should be reflected in regulatory processes and supervision, where increased efficiency means having both impactful and sustainable results.

The European AML/CFT framework is also based on this approach: that financial institutions should work risk-based. That they must use their time and resources more effectively, by choosing which cases to investigate, based on their risk profile. That they must hold customers and countries, products and services, transactions and geographical areas against a risk scale. A scale that then determines the type and extent of the risk involved. And when the risk proves to be too high, one can rightly refuse a customer, stop a transaction, and so on.

Unfortunately, we notice that in practice, a rule-based approach is still often the case.

To help Dutch financial institutions to work risk-based, we held a series of round table discussions with the banking sector. They shared both experiences and difficulties in applying the risk-based approach. This provided important input for us to rework our own guidance, which we published recently. In that guidance, we provide more examples on how to apply the rules not only when the risks are high, but also when the risks are low. We made clear that a risk-based approach means that you do more where necessary, and less where possible. The goal is to give financial institutions the confidence that, in those cases, less intensive measures will suffice. In other words, to keep the financial system clean, without unnecessarily holding things up.

Just like all of us are working on a reliable and honest financial system, the criminal world is constantly looking for ways to infiltrate. To gain a layer of legality. To outsmart the system.

In the fight against criminal money and for a clean financial system, we all have to step up. Each in our role, of course. But every day again.

In recent years, national and international legislators have worked hard on further developing the AML/CFT framework.

With the publication of the AML package earlier this year, and the incoming European Anti-Money Laundering Authority – AMLA, we are now stepping up our game. AMLA entails a pivotal shift with far-reaching implications – for us as supervisory authorities, for the institutions we oversee, and, ultimately, for society as a whole.

The first proposals for the AML package were introduced in 2021. Now, after nearly three years of negotiations, we are all preparing for the new framework. Our gathering today comes at a landmark moment. At a time when we are laying the foundation for a more cohesive and harmonised approach to AML/CFT across Europe. As such, it will further decrease regulatory arbitrage that criminals try to exploit, and further increase our efficiency and effectiveness. Crime should not pay. Not in any way.

This European harmonisation will, of course, not mean a one-size-fits-all approach. On the contrary, we, as supervisors, will increasingly be challenged to adopt a nuanced case-by-case approach, guided by thorough risk estimates – by assessments that are tailored to the specificities of each institution and context. The evaluation of, for instance, an insurance company will differ significantly from that of a private bank.

To make the European AML framework a success and prepare our respective authorities for this transformative shift, we must pool our strengths, unite our efforts, and strive – together – for the best outcome we can achieve.

So, I encourage you to have open-minded discussions today and tomorrow. To share experiences and learn from each other. And to show that trust in the financial system and in our rule of law will never be for sale. Crime should not pay. Not in any way. Ever. And all of you get to play an important part in achieving this.

Thank you, and I wish you two inspiring days.