Money launderers and financial criminals should — in theory — have good reason to fear the European Union’s army of white-collar cops. The bloc boasts 28 national financial regulators, a euro-zone banking regulator in Frankfurt (the Single Supervisory Mechanism), an EU-wide banking supervisor in London (the European Banking Authority), and a financial markets watchdog in Paris (the European Securities and Markets Authority). It’s a blizzard of three- and four-letter acronyms. 

Yet the latest embarrassing blame game over the continent’s string of dirty money scandals suggests the cumulative effect is more like fielding a team of 100 children on the soccer pitch, only to get decisively beaten by three grownups. (See here for what that looks like).

The current spat concerns Danske Bank A/S, the Danish lender at the heart of what might be Europe’s worst ever money laundering case. After revelations that a big chunk of $230 billion flowing through the bank’s Estonian unit over many years was “suspicious,” Brussels demanded an inquiry into whether the EU’s oversight rules had been applied correctly; and whether Denmark and Estonia had failed in their roles as national supervisors. That probe came up empty-handed on April 17, when the EBA said it had closed its investigation and that its board of supervisors — made up of 28 national representatives and a chairperson — hadn’t flagged a breach of EU legislation.

It turns out that this wasn’t exactly an open-and-shut case. An internal draft EBA report, seen by Bloomberg News, found that Danske’s regulators in Denmark and Estonia failed on a number of counts to live up to their obligations in upholding EU money laundering laws. It just so happened that the EBA’s board of supervisors, which of course includes regulators from Denmark and Estonia, didn’t agree.

While it’s entirely possible that the board’s view was based on sound legal analysis, it’s possible too that the very charged politics of the situation played a role: National supervisors aren’t very keen on giving Brussels more ammunition to take away their powers. Denmark’s government has defended the outcome of the EBA investigation, but the Green Party MEP Sven Giegold said it proved that EU authorities “do not sufficiently cooperate” in the fight against criminals.

This all gets to the heart of what makes Europe’s financial defenses look more like Swiss cheese than Fort Knox. Backers of pan-European regulation in Brussels see national supervisors as weak and self-interested links in the chain; the national supervisors in turn see Brussels as a power-hungry centralizing threat. This tension means that relatively young institutions like the EBA and ESMA serve as uneasy compromises that have the aura of supranational authority without the full means to wield it. A recent review of their powers, which was seen by the European Commission as a chance to give the two bodies more teeth, more funding and more independence, was less ambitious than hoped for.

What will happen next? The Commission will no doubt exploit the EBA’s obvious blunder to take individual countries to task and force more soul-searching over the governance of pan-European regulatory bodies. One hopes that proposals to improve the EU’s money laundering framework will get an airing, including bigger and more consistent bank fines. But it will take years to build the necessary political capital to enforce a strong, unified approach to EU financial crime. In the meantime, those scandals will keep on coming.

To contact the author of this story: Lionel Laurent at

To contact the editor responsible for this story: James Boxell at

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.

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