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Race to host EU’s money-laundering watchdog hots up

The EU is looking for a home for its money-laundering agency
The EU is looking for a home for its money-laundering agency Copyright (Alexas/Pixabay)
Copyright (Alexas/Pixabay)
By Jack Schickler
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Heft, geopolitics and money-laundering prowess are all coming into play as cities from Madrid to Vilnius jostle for a new agency

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A battle to host the EU’s anti-money laundering agency is stepping up as nine rivals face off following the close of applications.

It’s a bitter fight that is pitting east against west, small against large, and founding members among newer arrivals to the bloc, according to numerous sources Euronews has spoken to.

The EU wants to toughen up its dirty-money rulebook after a string of banking scandals — but first faces a scrabble over where to put the 400-odd staff who’ll police it, and the 10,000 square metres of office space they’ll need. 

Applications closed last week, and candidates include Paris, Frankfurt, Rome, Madrid, Brussels, Vienna, Riga, Vilnius and Dublin.

While the bloc’s main institutions are found in Brussels, Luxembourg and Strasbourg, its 40-odd specialised agencies are dotted throughout its 27 member states, covering everything from space exploration to gender equality — and the opportunity to host these institutions is prized by all the bloc’s countries.

The battle to host the EU’s medicines and banking authorities, forced to flee London after Brexit, was so tightly fought that winners had to be selected via lucky dip.

Now there’s a similar squabble brewing over the EU’s as-yet-uncreated Anti-Money Laundering Authority, AMLA — which, under plans being mulled by legislators, will directly supervise dirty money controls at around 40 of the riskiest cross-border financial institutions, and keep an eye on high-risk sectors like precious metal and art traders.

German practicality

The EU’s biggest member, Germany, made its AMLA pitch based on practicality — saying the new agency should be in Frankfurt so it can work effectively from day one.

“AMLA should be in a banking centre,” German Finance Minister Christian Lindner told a Brussels audience on Thursday, making his case for the place that’s already home to supervisors from the European Central Bank. “No city is as uniquely positioned to foster this kind of collaboration.”

But if Germany is touting its existing heft, its rivals are arguing the reverse – and say it’s unfair that the oldest, biggest EU members should see all the bloc’s largesse.

“Ireland is at the centre of Europe in terms of our participation … despite being an island at the periphery of it,” Jennifer Carroll MacNeill, Minister of State in the Irish Department of Finance, told Euronews.

Despite being an EU member for over 50 years, Ireland hosts just one, “very small,” EU institution, labour market agency Eurofound, she said — though she acknowledges that her call to put AMLA in Dublin put her at loggerheads with Lindner.

The German minister is “making a different case to me — a diametrically opposed case,” she said. “He’s saying, let’s concentrate that further at the heart of Europe.”

Who’s the most attractive?

Bids to host the agency closed late Friday, and policymakers have said the winning candidate must attract top-notch staff. That focus could spell good news for candidates such as Vienna, consistently rated as the world’s most liveable city.

But would-be AMLA locations will also be scrutinised for their own track record in fighting illicit finance. Parking the agency in a money-laundering hotspot would, at the very least, look bad for the bloc’s reputation.

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That has forced candidates like Lithuania onto the defensive. A 2022 report by the Council of Europe’s anti-laundering unit Moneyval threatened to issue a formal warning to the Baltic nation, after finding it wasn’t registering accountants and estate agents in line with international norms.

But that’s not the whole story, Euronews was told by Finance Minister Gintarė Skaistė. She says the green, digital and talented city of Vilnius is the ideal AMLA home.

Lithuania already brushed up its rulebook for cryptocurrencies, and has a further anti-laundering bill set to be introduced this parliamentary session, the minister told Euronews, meaning the Moneyval opinion could soon be out of date.

She also cites a rival study by think tank the Basel Institute on Governance which puts Lithuania among the ten lowest-risk AML countries in the world, alongside Denmark and Andorra.

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Nearby countries have been embroiled in recent money laundering scandals. A few years ago, Latvian Bank ABLV liquidated after the United States Treasury badged it as of money laundering concern, while Danske Bank has pleaded guilty and agreed to forfeit $2 billion for illicit payments in Estonia.

Skaistė distanced herself from those neighbours — but she thinks there’s a geopolitical case to pick a Baltic country in the face of Russian aggression.

“A strong institution, especially working in the field of anti-money laundering, would be a strong signal to the countries bordering Europe,” she said. “It would show a sign of solidarity and trust in the region: we’re part of Europe.”

Political sway

Final decisions on AMLA’s location must be taken jointly by the Council, which groups EU member states, and by lawmakers at the European Parliament.

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If EU funding drifted towards the constituencies of those lawmakers holding most sway, that could favour the bid made by another EU big beast, Spain.

The country currently chairs the Council as EU presidency, and also boasts one of the two MEPs leading the parliament’s work on the new agency, Eva-Maria Poptcheva.

Yet Spanish officials deny any bias towards their own pick, Madrid, and say they’re merely honest brokers in talks on the AMLA law.

“I don’t think at this stage that being in the rotating Presidency would provide an extra edge,” Carlos Cuerpo, secretary general of the Treasury in Spain, told Euronews. “There will be a clear separation from our side when we’re looking at the candidacy of Madrid.”

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Cuerpo said Madrid’s bid is the “strongest overall proposal,” implying it can stand on its own merits — but he also says it’s “high time” for the major capital city to finally land an EU institution.

The process for whittling down options is going to be complex and fierce. And that’s just one of several ongoing disputes related to patronage in the finance sector.

Finance ministers are also locked in a totemic battle over fiscal rules, and over who should run the European Investment Bank — a position for which Spain’s Nadia Calviño is a leading candidate.

Grand bargain

Yet both Cuerpo and Lindner deny there’ll be any overlap between those already complex negotiations.

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“It should not be part of any kind of bargaining, which member state could host AMLA,” Lindner said. “There are arguments for Frankfurt which are not connected to any other decision we have to make over the next weeks and months.”

Whoever does take the AMLA crown, there’s going to be a lot of sore losers, and a lot of showcase office space left bereft. Some are speculating, if only jokingly, about what might happen to it.

If AMLA doesn’t want to use the those buildings earmarked for it in Frankfurt, Lindner muses that they would make a suitable new home for his own ministry.

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