Sun. May 29th, 2022

EBA concludes its Luanda leaks investigation and points to significant differences in competent authorities’ responses to emerging money laundering and terrorist financing risks.

22 February 2022

The European Banking Authority (EBA) published today the findings of its assessment of competent authorities’ responses to the 2020 Luanda leaks. The EBA found that competent authorities across the EU adopted significantly different approaches for identifying and tackling money laundering (ML) and terrorist financing (TF) risks highlighted by the leaks. These approaches varied beyond what the EBA would have expected under a risk-based approach.

The information contained in the documents leaked by the International Consortium of Investigative Journalists (ICIJ) on the financial affairs of Isabel dos Santos or her associates raised a number of concerns, that included the risk that financial institutions in the EU were handling the proceeds from corruption.

The EBA worked to understand the steps AML/CFT competent authorities in the EU had taken to assess the ML/TF risks to which their sector was exposed, in light of this information. The EBA found that more than half of all competent authorities assessed the information provided in the leaked ICIJ documents. Several of those authorities subsequently identified institutions that had links with Isabel dos Santos and her associates, in spite of the fact that these institutions had not been explicitly mentioned by the ICIJ. On the other hand, other competent authorities took no action when the leaks were released. This suggests that there is a risk that proceeds from corruption linked to Isabel dos Santos and her associates may not have been detected and may continue to be laundered through the EU’s financial sector. In addition, the EBA noted that not all competent authorities took advantage of existing cooperation channels to exchange information and improve their understanding of the ML/TF risks to which their sector was exposed in this context.

The existing EBA Guidelines set clear expectations of the way competent authorities should identify, assess and manage the ML/TF risks highlighted by the Luanda Leaks holistically and across all areas of supervision. The EBA also identified good practices in some Member States, including steps by competent authorities to put in place dedicated processes to identify and swiftly react to instances of crystallised ML/TF risk, as was the case in the Luanda Leaks.

Background and legal basis

In January 2020, the International Consortium of Investigative Journalists (ICIJ) published hundreds of leaked documents that focused on the financial affairs of Ms Isabel dos Santos, the daughter of a former president of Angola, and various companies and individuals linked to her. In its resolution of 10 July 2020 on a comprehensive Union policy on preventing money laundering and terrorist financing, the Commission’s Action Plan and other recent developments (2020/2686(RSP)), the European Parliament called on the EBA to conduct an inquiry into the Luanda Leaks revelations.[1] To respond to the European Parliament’s request, the EBA carried out an inquiry under Article 9a(5) of the EBA Regulation. This was the first time the EBA was using the investigative tool at its disposal enshrined in Article 9a(5) of the EBA Regulation, which empowers the EBA to perform risk assessments of the strategies, capacities and resources of competent authorities to address the most important emerging risks related to money laundering and terrorist financing at Union level.

The EBA guidelines set clear expectations for the way competent authorities should identify, assess and manage emerging ML/TF risks, similar to those highlighted by the Luanda leaks, holistically and across all areas of supervision. These guidelines include: the EBA Risk-based Supervision Guidelines; the EBA Guidelines on ML/TF risk factors; the ESAs joint Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings; the EBA new Guidelines on a common assessment methodology for granting authorisation as a credit institution; the EBA Guidelines on the assessment of suitability and internal governance; the revised SREP Guidelines; the EBA new Guidelines on cooperation between prudential and AML/CFT supervisors and Financial Intelligence Units (FIUs).

[1] European Parliament, Resolution on a comprehensive Union policy on preventing money laundering and terrorist financing – the Commission’s Action Plan and other recent developments (2020/2686(RSP)), paragraph 20.

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