COMPLIANCE COUNCIL: Regina Doherty MEP calls for ‘shared liability’ fraud regime

THE EU’s new AML rules will do more than tighten existing procedures and standards.

For the first time, they aim to harmonize AML obligations across all EU Member States through a directly applicable regulation—closing the loopholes that criminals have long exploited.

In finally having a Single Rule Book, we have a powerful tool to reduce fragmentation, improve compliance, and make cross-border cooperation more effective.

At the apex of this new structure is AMLA, the EU’s new Anti-Money Laundering Authority. AMLA is not just a symbolic body—it has real supervisory power, including over high-risk financial institutions, and it will be able to impose pecuniary sanctions in serious or systematic cases.

I know these new rules and structures have an impact on the industry. I know as well that everyone is committed to meeting the standards set. But, very often, we could improve lines of communication to ensure that challenges in implementation can be heard, addressed, and resolved.

In order for these new structures to succeed, we will need strong public-private collaboration. Financial institutions, non-financial entities, regulators, and civil society must work hand in hand. We need transparency, information sharing, and trust.

AMLA implementation

We also need to make sure that implementation requirements really follow the risk-based approach that has been at the heart of these new rules since the beginning.

Finally, AMLA needs to work quickly to build capacity. But it cannot do so without a real partnership. Based on trust with national authorities, and with industry actors. This is especially important when it comes to cross-border cooperation. Money laundering doesn’t respect national borders; neither should our efforts. We must leverage AMLA and our shared regulatory framework to coordinate better, share intelligence, and act decisively.

When it comes to the efforts and burdens on the banking and payments sector, I want to give a particular mention to the issue of online fraud.

Fraud impacts

In my own country, Ireland, over 3 in 4 Irish people say they have encountered some form of suspicious activities online, while 45% of people state that they have experienced more suspicious activity compared to this time last year.

Such incidents are hard to track and almost impossible to reverse after they happen.

It is all too easy to post fake advertisements, purporting to be from regulated institutions, and for unsuspecting citizens to be scammed out of their own money before the advert disappears again. We have seen news reports that some platforms are currently making 10% of their advertising revenue from such fake advertisements, thereby profiting from people’s misery.

One example of where action could be needed is the revelations this week from the International Consortium of Investigative Journalists about the role of some cryptocurrency companies in profiting from proceeds of scams, theft and other crimes, which cause financial destitution for many. This could be something for AMLA in particular to follow up on. 

Enforcement

The EU has already begun equipping itself with key instruments to address this issue and ensure all the relevant actors contribute to fraud prevention and mitigation. The DSA places obligations on online platforms to act against illegal and fraudulent content, ensuring that the digital space is safer for users, while the Payment Services Regulation (PSR) will hopefully strengthen consumer protection, introduce cooperation, liability and reimbursement rules in cases of APP and payment frauds and reinforce the resilience of payment systems.

If implemented fully and enforced effectively, these frameworks can represent a decisive step forward in the fight against online fraud.

The EU must take an ambitious stance in the fight against online fraud by making the best use of its solid legal framework. This requires consistent enforcement of existing DSA rules, the establishment of a shared liability regime in case of fraud under PSR, a strengthened cooperation between financial institutions, platforms, and law enforcement authorities, as well as better support for citizens who fall victim to fraud.

I know there is a trilogue about the fraud elements of the PSR next week and I hope there will be a positive outcome.

Europe must act to protect its citizens and safeguard trust in the Single Market. The existing regulatory tools must be applied with determination and coherence if we are to curb the growing threat of online fraud, and the challenge it poses not only when it comes to anti-money laundering and terrorist financing, but also to the resilience and confidence in the banking and payments system generally.

• Regina Doherty MEP delivered the above speech to senior industry figures and policymakers at the ‘Compliance Council’ roundtable at the European Parliament in Brussels on November 19