Category: Uncategorized

By Yasemin, Lanqin, Exuan and Shuhua

Money laundering is a global crime that undermines economies and causes corruption, crime and terrorism. The European Union (EU) has long implemented international standards and legislative frameworks to combat money laundering and terrorist financing within its territory. However, the scandals highlight that the legislative frameworks without the right enforcement cannot overcome the problem. This blog post shows why the enforcement model should align in terms of the anti-money laundering (AML) industry and whether the creation of the new Anti-Money Laundering Authority (AMLA) can better enhance this mission.

Spotlighted dilemma and its extended approach

Money laundering is the process of hiding funds from illegal activities because criminals want their money to look clean. This is generally divided into three steps. First, criminals put the illicit gains into the financial system. Then, they move money around to hide its origin. Finally, they bring the money back as if it had been earned legitimately. Money laundering is very threatening, which helps to support crimes such as terrorism, fraud, and corruption, and reduces people’s trust in banks and financial systems.

Over the past decade, many money laundering scandals have occurred in the EU. In 2018, Denmark’s largest bank- Danske Bank, was involved in a huge money laundering case in which $236 billion was laundered through its Estonian branch. Lately, Rabobank is about to face prosecution because it failed to prevent money laundering. From the Danske Bank scandal to the recent Rabobank case, there are not isolated failures but symptoms of weaknesses in the EU’s decentralized AML enforcement structure.

Now, the EU has decided to fight back with a new EU agency- AMLA (the proposal was tabled in 2021, and the regulation was adopted in 2024). Through EU-level supervision, AMLA will support national supervisors and financial intelligence units (FIUs), and enhance cooperation and coordination among member states. But there is another question: Does this new EU agency fit the industry it supervises?

National enforcement wasn’t enough

The current AML mechanism is based on national authorities, with European Banking Authority (EBA) advice and policy-setting. Financial intelligence units (FIU) collect unusual transactions from entities with an obligation to report, analyse them and share them with law enforcement and security agencies as necessary, and exchange information with FIUs worldwide. The concern is that the ‘insufficient detection of suspicious transactions and activities by FIUs, particularly in cross-border cases, limits their capacity to suspend transactions and to disseminate relevant information to competent authorities’. Due to a lack of coordination and information sharing among FIUs, cross-border suspicious transactions are often not identified and responded to in a timely manner’.

For instance, in the Netherlands, Dutch banks are required to report unusual transactions to the FIU-Nederland. DNB supervises the effective fulfilment of the banks’ compliance obligations under the Anti-Money Laundering and Counter-Terrorist Financing Act (Wwft) and the enforcement of sanctions. In 2024, the recent Dutch AML cases, including Volksbank and Rabobank, indicate weaknesses in national enforcement, like a dysfunctional system that generates alerts about customers and their transactions and inadequate action following an alert.

Besides, ‘the application of AML/CFT rules across EU is both ineffective and insufficient’ is hard to ignore according to the impact assessment. There are differences in the formulation and enforcement of AML regulations among member states, leading to unclear rules and inconsistent standards, which affects the uniformity and effectiveness of the entire framework. Besides, the inconsistency of regulatory resources and methods across countries has left some industries and subjects in the regulatory blind spot for a long time, especially in the non-financial sector.

Europe’s new watchdog: AMLA

As one manifestation of the AML’s enforcement model transferring from prominently relying on member states’ authorities to the institution at the EU level, AMLA is further empowered to deal with challenges such as the lack of effectiveness and insufficiencies of the contemporary AML framework.

As an integrated system composed of itself and national authorities, AMLA is entrusted with more direct and indirect supervision powers compared to the more advisory or policy-making role assumed by EBA. For instance, in terms of governing selected obliged entities in the financial sector, national supervisors participate in selecting, listing, and reviewing the entities by the joint supervisory teams in charge of AMLA. Meanwhile, AMLA can exercise direct supervision, such as by adopting binding decisions and especially pecuniary administrative sanctions. In terms of governing non-selected obliged entities, while AMLA enforcement power relies on member states, in which national supervisors retain full responsibility and accountability for direct supervision, AMLA actively coordinates national authorities to help them increase their enforcement effectiveness. With these powers entrusted, AMLA is expected to enhance AML enforcement through the centralization of certain tasks, responsibilities and powers within such a central authority. Nevertheless, diversity and disparity in AML enforcement among member states still have chances to occur.

The Industry Matters: AMLA ensures the security of the industry and consumers

Money laundering is not just a local issue; it is international. The threat of money laundering and financial crime is cross-border and involves high risk. Because of these characteristics of money laundering, prevention needs to be a priority before non-compliance occurs. If it is detected, authorities need to move faster and take effective action.

However, there has to be the right enforcement mechanism to prevent it. Because good laws can only be better implemented with the right hands. If the regulated industry is highly concentrated and international, as previously pointed out with the recent scandals, national authorities may fail to implement such successful rules. Unmatching the enforcement model with the regulated industry can create problems not just for the market actors but also for the safety and trust of EU citizens.

To illustrate this challenge, consider the analogy of housing design. Imagine living in a detached house with a concrete exterior and buying quality paint perfect for your walls. It might be the ideal solution for your home alone, but what if it is part of a larger complex? Suddenly, it might not fit in with everything else. The best results will not come from acting alone but from a shared decision to harmonize the whole complex. It is the same with anti-money laundering enforcement; it cannot be expected to work effectively if each Member State paints its own house, because the regulated AML industry is not a house but an integrated complex. AMLA is a new EU agency that ensures that Member States are on the same page when it comes to supervising money laundering. Its centralized powers and EU-wide reach aim to sustain a better and risk-free industry in the future.

The EU is moving AML enforcement to Brussels by establishing a centralized enforcement model: AMLA. With AMLA stepping into the role of Europe’s central watchdog, the EU is aligning its enforcement with the regulated industry characteristics. The next challenge will be ensuring AMLA’s effectiveness and adaptability in a fast-evolving risk landscape.

The application of competition rules to the conduct and concentrations of employers has been called ‘the new frontier for competition policy’ (see here). This so-called ‘labour antitrust’ has been growing rapidly especially on the other side of the Atlantic over the last fifteen years (see here). ‘All eyes are on labor’ in the United States even in 2024 (see here).

Competition between employers is receiving an increasing attention also on the old continent. We have seen enforcement cases in various European countries (see here). The European Commission reported this summer that it started its first ever formal investigation into no-poach agreements. Earlier this year, the Commission also published a policy brief called Antitrust in Labour Markets.

Yet, markets on which undertakings compete for labour are completely absent from the revised Market Definition Notice (Notice), which the Commission published this year. This is a pity because including labour markets would have given more credibility to the Commission’s mission to intervene in these markets and it would also have provided guidance to other enforcers of EU competition law. My newest working paper reflects on the omission and discusses how to define relevant labour markets.

 

Continue reading “[REPOST] How to Define Relevant Labour Markets?*”

This blog post is based on the book Van hard naar hart? Handhavers over de menselijke maat in de Participatiewet. This research is funded by the Gratama stichting.

Continue reading “From tough to tender? A new change in enforcement regime of the Dutch social security system”

Over the past decade, no firm has faced more scrutiny for violating competition laws than Google. The avalanche of cases against the firm—over 100 around the world—is almost unprecedented. In that light, the question facing competition authorities is increasingly not whether Google has broken the law, but rather what to do about it.

Continue reading “Google AdTech – Break Up or Break Out?”

European policies and legal instruments are increasingly drawn to a technocentric approach regarding Artificial Intelligence (AI) fairness – that is, they pay a lot of attention to the technical issues of AI, such as ensuring that datasets are balanced and free from errors. With this blog post, I argue that it is not sufficient to focus solely on the technical aspects of fairness without also considering the social, political, and economic systems that shape AI’s development and deployment. Instead, a broader socio-technical approach should be considered. This post is based on my recent publication “Predictive justice in light of the new AI Act proposal”.

Continue reading “Predictive Justice and the AI Act: the reuse of sensitive data for bias mitigation”

Ecosystems

The 2023 Booking/eTraveli merger prohibition by the European Commission (EC) was the first EC merger prohibition concerning digital platforms. Booking offered primarily a hotel online travel agency (OTA), amongst other smaller offerings in flights and car rentals, while eTraveli offered a flight OTA. The concept of an ‘ecosystem’ that was used in the Commission’s theory of harm was unique. Though the concept of an ecosystem has been used in other cases, also outside of merger control, the term still lacks an accepted universal definition. Also unclear is the extent to which such a theory of harm differs from conventional theories of harm, what the standards for evidence under this theory of harm are, and how such theories of harm would affect enforcement.

In this context, we recently published an article defining ecosystems, and potential theories of harm concerning ecosystems. In this blog post we investigate how these theories might change the enforcement of merger control.

Continue reading “Ecosystem theories of harm: application and enforcement (by Manu Batra, Paul de Bijl and Timo Klein)”

Today, our blog celebrates its 100^th blog post. Since September 2016, we issue at least one blog post per month, always on the last day of the month. The blog is open to anyone wanting to contribute, also in a different language than English. Our aim is to create a central point for information, research and discussion on the pertinent issues related to the so far understudied theme of the enforcement of EU law. Until now, we have had blog posts, which would announce a new book, idea or project, discuss a recent court judgement or legislative proposal or act, give a comment on a publication or summary of a recent event, to name but a few of our topics. The form of the blog post is thus flexible and inclusive.

This special blog post presents a discussion on some of the pertinent questions that the editing team sees as important in their respective research fields and warrants our further attention and investigation. This post is thus also a call for future blog posts and other initiatives, which could support and enhance the main theme of the blog – ultimately, to aid legislative and enforcement practices (in the EU as well as other jurisdictions) and to promote beneficial policies for society. Ideas for blog posts and full texts could be sent directly to the editors, whose contact details are to be found in the right pane on this website.

But first of all, why blogging?

Continue reading “100th Blog Post on EU Law Enforcement: pertinent questions that deserve our future research and societal attention. Call for Blog Posts (by Kelly Blount, Zlatina Georgieva and Miroslava Scholten)”

The EU body of law counts more than 100,000 pieces of legislation and some argue that the legislative activity of the EU has been declining. However, are these laws being followed and do they bring the expected results? To answer these questions, it is important to investigate relevant implementation processes.

Enforcement is a process of monitoring compliance with laws, investigating possible violations and responding to the proven violations via corrections and sanctions. Upon an invitation from Edward Elgar publishing, I have organised a research handbook on the enforcement of EU law, which was written by 50 experts from relevant fields. This blog post gives a succinct overview of the main findings of this book, which has aimed to present the state-of-the-art in research and practice and outline directions for future research and policy. The book shows an evolution of the concept of enforcement of EU law and observes interesting trends. Based on a comparative methodology, it argues for an increasing importance of the preventive function of enforcement and shows an insightful variety of approaches that can be taken in this regard. Finally, the book discusses the question of success of enforcement by pinpointing the factors that could promote or hinder it.

Continue reading “Edward Elgar Research Handbook on the Enforcement of EU Law”

With the prominent role of digital platforms nowadays, switching has become a habit common to many users. A provider can come out of fashion very easily, as users migrate from one service to another in constant search for the best digital service and following the trend. Also “network effects” contributed to the wide spreading of the phenomenon. Against this backdrop, the concept of “portability” has first been articulated as a user right in Article 20 GDPR. This blogpost will portray the different roles acquired by the concept of “portability” throughout the years and spot its intricate relationship with digital platform law and regulation.

Continue reading “The evolution of EU portability law and its drawbacks”

In the realm of mergers & acquisitions (“M&A”) transactions, corporations almost always undergo due diligence, wherein the buyer conducts a thorough investigation and evaluation of the target company before entering into a transaction. In the context of due diligence operations, antitrust challenges may arise in specific situations, such as when the involved parties are direct competitors. The purpose of this post is to illustrate the instances when antitrust risks emerge during due diligence concerning M&A operations between competitors and to propose suggestions mitigating these risks.

Continue reading “Mitigating Antitrust Risks in Due Diligence between Competitors”