Huge weaknesses in preventing, detecting, and punishing money laundering in Greece, locates report by the Council of Europe drafted on behalf of European Commission with the assistance of the European Banking Authority, which is presented exclusively in the first issue of «Judicial Report.».
The report, which assesses how Greece is implementing the 4th EU Directive on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (EU Directive 2015/849), contains findings that reveal significant gaps and fragmented procedures that were not highlighted in 2019, when the Financial Action Task Force (FATF), the international body responsible for combating money laundering, assessed Greece.
What is extremely worrying, as reported by “Judicial Report,” is that the Council of Europe and the European Banking Authority are bringing to light serious problems in combating money laundering, as reported by institutions such as the Bank of Greece, the Money Laundering Authority, and the Independent Authority for Public Revenue, who are best placed to detect and punish money laundering and terrorist financing.
The assessment of our country was carried out in accordance with the methodology developed by the Council of Europe for this specific purpose, which examines ways in which Member States implement selected provisions of the 4th Community Directive on money laundering.
“The Bank of Greece’s control framework is outdated”
With regard to the Bank of Greece's anti-money laundering controls and the regulatory requirements set by the central bank, the report makes some worrying findings, as, according to “Judicial Report,” it presents the framework as outdated.
As is typically noted, The decisions of the Bank of Greece implemented by supervised entities do not take into account developments after 2009! «The lack of regular, up-to-date information on the business risk assessment of individual financial institutions is detrimental,» it is pointedly noted.
Indeed, as stated in the report, despite the provisions for a wide range of penalties under the law, The Bank of Greece has adopted the lowest penalties in cases where it has identified money laundering.
Specifically, out of the 14 on-site inspections carried out by the Bank of Greece from 2017 to 2019, violations of the regulatory framework were found in all cases, 62 in total. For these, 22 fines were imposed on credit institutions, natural persons, insurance companies, and currency exchange offices, as well as 42 corrective measures on banks, insurance companies, and currency exchange offices.
The fines imposed on the Credit Institution range from €27,500 to €470,000, while the fines imposed on natural persons range from €10,000 to €390,000. According to their report, the evaluators express doubts as to whether the fines imposed on the credit institution can be considered dissuasive.
The Capital Market Commission does not impose sanctions
The control scales also stand on the fact that the Capital Market Commission does not impose sanctions for the suppression of money laundering and terrorist financing, but imposes corrective measures.
In 2020, 11 such corrective measures were imposed in relation to findings from 2019, in 2019 none were imposed, in 2018 one was imposed, and in 2017 two corrective measures were imposed.
In fact, the auditors disagree with the Capital Market Commission's position that these measures are sufficient. “Given the total number of inspections carried out by the Capital Market Commission since 2017 (36 on-site and 394 off-site inspections), the total number of corrective measures (14 in total) appears to be too low to show that the Capital Market Commission is taking effective corrective measures,” the report notes.
According to Judicial Report, the report places particular emphasis on the level of understanding of the risks of money laundering and terrorist financing by non-financial businesses and professions. «Overall, lawyers, real estate agents, high-value goods traders, and non-certified accountants show a poorer understanding of the risks. There is no specific guidance for these areas in terms of conducting risk assessments at the entity level,» the report notes.
Among other things, the Council of Europe and the European Banking Authority found «widespread confusion» regarding the concept of terrorist financing, with Greek authorities associating it purely with the migrant crisis. «Risks related to the financing of foreign terrorism and internal risks are largely ignored,» the report notes.
Fines exceeding €1 million imposed on online gambling and casino providers
For the Gaming Supervision and Control Commission, it should be noted that during the period 2017-2019, it imposed 14 fines totaling more than €1 million for violations of the regulatory framework for combating money laundering and terrorist financing.
Specifically, 15 fines (approximately €950,000) were imposed on online gambling service providers, penalties were imposed on four casino companies (€64,000), and one fine was imposed in relation to electronic entertainment games (€1,500).
