EU needs to improve governance of financial supervisory authorities

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The decision made by European Banking authority to not commence supervisory inspection in relation to Danske Bank case proves the need to work on improving supervisory capabilities of European authorities, says European Commission Vice-President Valdis Dombrovskis.

On Monday, 29 April, Financial Times reported that European Banking authority decided to not commence an inspection in relation to the money laundering scandal in Danske Bank.

Financial Times mentions that in a vote on 16 April European Banking authority declined the internal report project regarding the flaws in the supervision of Danske Bank case. The report project identified four law violations in the way the bank was being supervised by Danish and Estonian authorities, as well as specific recommendations for the two countries. In spite of that, European Banking authority’s Supervisory Council voted in favour of ending the investigation without making any conclusions.

Dombrovskis stresses that the recent money laundering scandals in EU member states show that money laundering needs to be addressed on a European level, not be left to each separate country to handle alone. This is why last year European Commission prepared legislative proposal. It was also approved, providing additional authority in the fight against money laundering for European Banking authority, reminds the politician.

«However, European Banking authority’s decision to not commence inspection of one of the biggest money laundering scandals in Europe – Danske Bank case – shows the need to continue work on improving European authority’s supervisory capabilities to ensure proper application of EU regulations in all member states,» stresses Dombrovskis.

European System of Financial Supervision forms a network with a centre consisting of three European Supervisory Institutions, European Systemic Risk Board and state supervisory institutions. Its main objective is ensuring consequent and appropriate financial supervision in the European Union. European Supervisory Institutions are European Banking authority, European Insurance and Occupational Pensions Authority, and European Securities and Markets Authority.

As it is known, Danish Danske Bank plans to leave Baltic States and Russia soon. The bank has announced the decision to cease operations in Baltic States and Russia was made regardless of the decision made by Estonia’s financial services supervisory institution to close the bank’s branch office in Estonia.

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