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Emerging Markets

Estonia rejects new EU agency to fight financial crime

Estonia’s finance minister tells GlobalMarkets why he does not believe that the EU should set up its own anti-money laundering agency but should instead focus on more effective cooperation and faster information-sharing

Estonia’s finance minister Martin Helme has rejected calls to establish a new EU agency to fight financial crime, arguing that the best approach for combatting money laundering was through local institutions and more effective international co-operation.      

Helme’s view conflicts with the stance of some other EU member states, including France and Italy, who want to approach the issue of financial crime at a regional level.

Recent changes to EU rules have already handed the European Banking Authority more enforcement powers to counter money laundering and the financing of terrorism, but many expect that the bloc will move towards setting up a new anti-money laundering (AML) agency.

Nicolas Véron, a senior fellow at the Peterson Institute for International Economics, said that this was one of his criteria for success for the incoming European Commission. “It is a low-hanging fruit and has to be reaped,” he said.

But Helme told GlobalMarkets that a new EU AML authority could not be “more effective in fighting this sort of crime than your local institutions”.

“Yes, the local institutions can be asleep at the wheel too, but at least when they wake up, they react quickly as the Estonian authorities did,” he said. “The answer is not in my view to pool even more decision-making power and control over banking into supranational institutions. The answer is more effective co-operation and quick information-sharing, which could be institutionalised.”

Helme continued: “The risks in Estonia are different to the risks in Greece or Iceland or Germany or France. They are very different. You have to have flexibility, and you have to have local knowledge to see where the problems are.”

Danske Bank

Estonia has been at the heart of a big money laundering scandal, which has shaken Europe over the last couple of years. Danske Bank stands out as the case with the highest profile. It is involved in various investigations over allegations that it processed about €200bn of suspicious payments through its Estonian branch between 2007 and 2015.

“Estonia’s economy and reputation has taken a very large hit from all of this,” said Helme. “It is sometimes underestimated how badly it has damaged these things.”

Earlier this week in Washington, in collaboration with the Institute of International Finance, Deloitte published a white paper examining the global framework for fighting financial crime.

Deloitte and the IIF recommended improvements around technology, information sharing and public and private sector co-operation.

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