ECB letter regarding AML risks

On 3 May 2018, the European Central Bank (ECB) published a letter from its chair, Daniele Nouy, to Sven Giegold MEP. In the letter Ms Nouy discusses money laundering incidents, information exchange regarding money laundering risks and the integration of those risks in ECB prudential supervision. Ms Nouy notes among other things that: there is a possible misalignment between the EU framework for crisis management in the financial sector (the Bank Recovery and Resolution Directive and the Single Resolution Mechanism Regulation) and national insolvency laws. Under the EU framework, not only present illiquidity but also likely illiquidity in the near future are reasons that a bank might be declared as ‘failing or likely to fail’. By contrast, insolvency laws typically require present and actual illiquidity before insolvency proceedings can commence on liquidity grounds. This creates the risk of a “limbo” situation in which it is unclear how to proceed, such…

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