6 AMLD has brought upon the EU market, and in turn as a spillover effect to the global market, drastic changes in the way regulators perceive anti-money laundering (AML) and counter-terrorist financing (CTF) both in the private sector and the governmental sector.
While the private sector has been bearing itself for a significant change in regards to the new framework that has been in force since December 3rd 2020, the governmental and IGO sector in the EU has been following the lead of the market, at a typical EU pace.
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This glacial pace that the EU governmental sector is moving towards, a harmonization of 6 AMLD, has been championed by the European Space Agency, to the surprise of the EU Commission and the European Court of Justice (ECJ).
The European Space Agency issued on May 2021 a new policy in regards to prevention, investigation and detection of fraud within the Agency, which falls directly under 6 AMLD.
The new policy does not fall under the scope of a Regulation or Directive, and at the same time, the policy is not an EU Decision, which has been issued by the European Space Agency Director General’s Office ( ESA DG).
The definition of fraud within the Policy, which has been issued in a form of communication, falls directly under 6 AMLD’s regulatory framework. Within this framework, the issue of financial liability is of crucial importance. The Policy states that each ESA staff member will be directly financially responsible and liable for gross negligence or deceitful willful act, part of the new reform of 6 AMLD.
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Furthermore, the policy takes into account the risk management, assessment and appetite of 6 AMLD when assessing prevention or detection of fraud. The Annex for Procedure Governing the Investigation of Fraud mirrors the annex for procurement of the ESA, in addition to 6 AMLD and privacy concerns of GDPR.
The ESA is the first EU Agency to take a proactive approach for 6 AMLD, which surprisingly enough, did not take the lead of ESMA, EBA or ECB, a financial intelligence unit of any Member State, or even central banks of an EU Member State. The ESA took its own lead and initiative, proving sound corporate governance and adherence to the EU’s regulatory framework. It is only natural that the financial and banking sector in the EU will follow the lead of the ESA, although it would have been expected that the process would have been the other way round.
The same may be said on the latter Regulation – GDPR. It seems that the financial and banking regulators and agencies in the EU have not taken a proactive approach in the combination of GDPR and 6 AMLD unlike the ESA which combines the needs and demands of both regulatory frameworks both in a Policy tackling fraud, and in a separate Policy for the prevention of distribution of information and protection of information within the ESA and the ESA’s third party providers and partners.
When you most expect the EU to act, it seems to follow the market, yet in certain instances, it seems that some Agencies take the lead ahead of the market, and show initiative in adaptation to the EU’s regulatory framework.
Does this mean that the EBA has to follow the ESA? Only time will tell.
Ella Rosenberg is an EU Law Regulatory Consultant and Co-Founder at Armada.