Europe should rein in its rogue bank supervisors
Clubby governance structures in the EU are obstructing the fight against money laundering.
After the eurozone sovereign debt crisis, and Italy’s subsequent sluggishness in tackling its mountain of non-performing loans, northern Europeans have tended to think that the need for a stronger European Union financial regulatory framework was all about controlling chaos and corruption in southern Europe.
It has seemed as if the assumption by the European Central Bank of a supranational supervisory role over prudential risks, for example, was to fix problems elsewhere.
The past year’s money-laundering scandals in northern Europe, above all at Danske Bank – but also, for example, at Deutsche Bank – have underlined the error of such thinking. Italy and Spain, by necessity, have gained relatively strong capabilities in this area.
Yet weak defences against money laundering in northern Europe are just as dangerous to the EU’s integrity as fiscal and macro-prudential profligacy in southern Europe. Money laundering should be just as demanding of a European solution.
There is a question of how much the generally higher level of trust in public institutions in Denmark was part of the problem at the supervisory level there, perhaps putting Danske Bank’s Estonian branch at greater risk of exploitation by money launderers.