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EU-wide anti-money laundering reforms, the growing threat of organized crime, sanctions against Russia and the interplay between data privacy and AML requirements emerged as frequent topics of discussion at the latest ACAMS-hosted annual conference in Europe.

After rubbing shoulders with hundreds of compliance officers from banks, digital payment platforms and other institutions, as well as regulators and law enforcement officials, the editorial staff at ACAMS moneylaundering.com parsed through our notes and reflected on The Assembly Europe 2024 to share some of what we learned with our readers.

European regulators on Tuesday and Wednesday discussed their preparations for the introduction of a single AML rulebook for the entire EU in 2027 as well as the impending launch of a bloc-wide supervisor, the Anti-Money Laundering Authority, and debated what those developments portend for compliance departments.

Among several revelations made at the conference, regulators said that AMLA will not begin directly supervising 40 of the EU’s “riskiest” financial institutions until 2028, two years later than what the European Commission, the bloc’s executive arm, originally planned.

Edward Conway, global head of anti-financial-crime compliance at Banco Santander in Madrid, questioned the notion that AMLA and the single rulebook will spell the end of AML-related guidance from national supervisors.

“That’s the message you hear from the European Commission, which is great,” Conway told attendees Wednesday. “But when you speak one-on-one with the national competent authority, you don’t get the same warm and fuzzy feeling that they’re going to get rid of their local guidance.”

Daniel Thelesklaf, head of Germany’s financial intelligence unit, said Tuesday that his agency is already making preparations to help get AMLA’s financial intelligence-sharing hub up and running soon after the bloc-wide regulator launches in Frankfurt next year.

Markus Schulz, global head of anti-financial crime compliance at Dutch lender ING, urged an audience of more than 500 compliance officers Tuesday to take a deep look at article 75 of the forthcoming rulebook, which establishes new legal channels through which financial institutions can share intelligence with law enforcement and each other.

But he warned compliance chiefs to not sit on their hands “waiting for the regulation to happen,” and to open the conversation with their colleagues on using the forthcoming channels to take their financial intelligence-sharing efforts to the next level.

“Article 75 has the power to empower us as financial crime fighters to start exchanging and sharing information in ways we’re not able to today,” Schulz said. “What’s important for us though … is to work through your banking association, to help to develop the right technical standards so that we can really use this to foster public-private partnerships.”

The invasion of Ukraine and the unprecedented barrage of sanctions against Russia that followed also took center stage in Amsterdam, with panelists delving into efforts, particularly by the U.S., to enforce the commercial and financial embargo to its fullest extent.

John Smith, ex-director of the U.S. Treasury’s Office of Foreign Assets Control, said Tuesday that OFAC would continue ramping up enforcement of the blockade, and underscored OFAC’s new authority to impose secondary sanctions on foreign banks and other institutions that willfully or inadvertently provide services to the Russian military.

“The U.S. government after the Russian invasion of Ukraine in 2022 really plussed up on enforcement,” Smith, now an attorney with the Morrison Foerster law firm in Washington, D.C., said. “When you have more people doing enforcement cases, there will be more of them, and the penalties right now are going to be higher.”

Panelists also discussed the new and evolving landscape of compliance, one in which regulators now expect financial services companies to use AML techniques to spot evasion of export bans and other trade restrictions.

Siiri Grabbi, a senior sanctions-compliance officer at Coop Pank in Estonia, said Wednesday that while some of the evasion schemes seen to date were difficult to detect, others were so simplistic they were hard to miss. Attempts to filter Russian timber and other wood into the EU through unexpected, senselessly chosen third countries fall into the latter category.

“We have even seen birch wood ‘growing’ in deserts, in Egypt, the United Arab Emirates—and very fast,” Grabbi said. Such cases have disappeared since they realized that, since birch is grown in Estonia, maybe we know where and how it grows.”

Paulis Iljenkovs, deputy head of Financial Intelligence Unit Latvia, expects legal challenges against his agency’s sanctions-related asset freezes to proliferate in the months ahead. The FIU’s legal division is preparing to defend the agency’s actions not only at the national level, but also in the Court of Justice of the EU.

Any case that reaches the EU’s top court may produce a ruling that could amount to “very authoritative guidance on what constitutes control [of a legal entity by a blacklisted person] in any particular given scenario … and this would be legally binding,” Iljenkovs said Wednesday.

Janneke de Smet-Dierckx, deputy chief prosecutor at the Netherlands Public Prosecution Service, was one of several law enforcement officials to highlight the growing threat of organized crime in the EU.

De Smet-Dierckx told attendees Wednesday that Dutch prosecutors have shifted away from following the financial trail of individuals linked to organized crime in favor of a “systematic approach” that focuses on the broader business model of each organization.

Intelligence gathered from hacking into Encrochat and other encrypted networks has given investigators unprecedented insight into the multi-national, underground banking networks criminals use to move money globally, de Smet-Dierckx said, but how those same criminals move their profits back into the formal financial system remains an “intelligence gap.”

Panelists at the three-day event in Amsterdam also discussed guarding the financial services industry from criminal infiltration, including by thoroughly screening employees, consultants and other third-party contractors.

“Know your criminal—put yourselves in their shoes, look at your business, where you work, how you work, and see how that organized crime group could affect you,” said Todd Clements, who leads complex financial-crime investigations at Citibank in Poland. “Build a strong culture. If the people are loyal to you, they’re a lot less likely to be corrupted.”

Gabriel Seixas, a senior prosecutor at the European Public Prosecutors Office in Luxembourg, said Tuesday that as of December, his agency had secured freezing orders against €1.5 billion of assets during the course of nearly 2,000 investigations into sales-tax fraud schemes and similar attempts to bilk national and EU coffers.

The agency may soon add investigating sanctions evasion to its portfolio, but organized crime will hold top billing for the foreseeable future.

“We have more than 200 cases that are linked to organized crime,” Seixas said. “Organized crime will be the biggest challenge in the next year.”

And that’s a wrap.

Safe travels home, and see you in Austin!

Contact Koos Couvée at kcouvee@acams.org and Gabriel Vedrenne at gvedrenne@acams.org