Bank of Lithuania
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According to the Bank of Lithuania, harmonisation of rules and requirements throughout the European Union (EU) would help to enhance anti money laundering (AML) and counter terrorist financing (CTF) efforts in an effective manner, eliminate existing regulatory fragmentation and ensure a unified European approach. Such position was submitted in the framework of the European Commission’s public consultation on the review of the EU legal framework on AML/CTF. 

“With requirements for the prevention of money laundering and terrorist financing continuously growing more rigid and given the free movement of financial services within the single market, everyone needs more clarity and precision. This would help financial market participants operating both in Lithuania and other EU countries to expand their activities in the single market,” said Marius Jurgilas, Member of the Board of the Bank of Lithuania. 

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. For example, national supervisory authorities are best informed of the specific aspects of their country (language, risks in national jurisdictions, etc.), which means that they should retain a certain decision making right.

This topic along with other relevant matters concerning the prevention of money laundering and terrorist financing will be discussed on 1 October during an international online conference Anti-Money Laundering and Counter Terrorist Financing: from Challenges to Possibilities