Designing Supervision under the Preventive Anti-Money Laundering Policy in the European Union

Abstract

Directive 2005/60/EC on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing is currently one of the main instruments which regulates efforts to combat money laundering (and terrorist financing) in the European Union. Respecting national procedural autonomy, this directive leaves a high degree of freedom for the Member States in designing their own supervisory architectures under the preventive anti-money laundering policy. This contribution adopts a systematic approach to the institutional differences between the EU Member States and presents four models of supervision that are currently present in the European Union. It explains the main characteristics of these models, categorises the EU Member States accordingly and analyses the potential strengths and weaknesses of each model, thereby providing a first indication of their effectiveness.