In January 2022, Irene Tinagli was re-elected as Chair of the Committee on Economic and Monetary Affairs in the European Parliament. She answers some questions on anti-money laundering and banking union, among other issues – and discusses what steps she thinks need to be taken to get more women in leading roles in finance.

The ECON Committee has expressed a lot of interest in the anti-money laundering (AML) files. What do you think of the latest Commission proposals? How much of a difference do you think the future AML authority can make?

Panama Papers, Pandora papers and other recent scandals have increased citizens’ awareness and the request for stronger and more effective legislation. Citizens justifiably do not accept that financial opacity is misused by organized crime and dodgy intermediaries, and we need to provide concrete answers. This is why the ECON Committee has been particularly vocal and active on AML.

So far, a patchwork of national rules and supervisory practices has proved ineffective in addressing money laundering risks in the EU. In addition, the emergence of new financial tools and technologies, such as crypto-assets and artificial intelligence, make all the old recipes obsolete and require a real game-changer in the fight against money laundering. The AML package will be key in equipping the EU with more harmonized rules in this respect. It is an important opportunity to rethink AML policies and tools, so we need absolutely to make it right.

The European Parliament is actively working on all the proposals. A single rulebook is necessary for ‘obliged entities’, for example credit institutions and financial advisors, to apply the same controls throughout the internal market, but also as a foundation for an integrated European anti-money laundering/countering financing of terrorism (AML/CFT) supervisory system. Financial Intelligence Units must become a stronger interface between the private sector and law enforcement. Let us also keep in mind that criminal groups act cross-border, the transactions take place cross-border, and financial institutions operate cross-border: that’s why we need a true European authority to ensure effective supervision, detect risky transactions and follow-up at cross-border level. The EU AML Authority needs to serve as the centerpiece of our AML system. We legitimately expect to set up a strong, independent and well-equipped authority to protect citizens and the internal market.

The Committee had a hearing in early February with Paschal Donohoe, and the benefits of the Banking Union were discussed. Although progress has been made, it is still far from complete. How do you think we can unblock the current situation and what do you think needs to be done to complete the Banking Union?

Yes, we did have a very productive exchange with Paschal Donohoe on 2 February, and it covered many relevant issues, including the prospects for the completion of the Banking Union. Paschal made the valid point that there are a lot of connected work streams all of which are important, to varying degrees, to different Member States. Reconciling such variety of perspectives is certainly a challenge, and I am sure that all your readers are as familiar with the issue as I am. We have the same spectrum of views across the different political groups in the European Parliament. I know how complex it is.

But I also know that we have come to a point in which completing the Banking Union is not a “nice to have”, something to build slowly for a distant future, but an extremely urgent need to strengthen the economic and financial infrastructure of the EU, to support the recovery, and to build up our resilience. Everybody needs to acknowledge that. And I hope that this awareness, this sense of urgency will help the adoption of a more pragmatic and less ideological approach and will lead us to finally find a solution to unblock the situation.

You are a member of the delegation for relations with the United States. How do you see cooperation, with the US and beyond, in the area of sustainable finance and the fight to tackle climate change?

Re-joining the Paris Agreement on President Biden's first day in office sent a powerful signal. In addition, there have been a number of encouraging developments at the regulatory level, which largely share elements of our work on sustainability disclosure and reporting obligations. Finance will be key on advancing quickly on the commitments of the Green Deal and the Paris Climate Accords. While the EU can pride itself for taking the lead, ultimately the fight against climate change is a global challenge. It is therefore of paramount importance to engage with other players and with the US in particular. Indeed, the challenge can be reached only on the basis of the cooperation with the other main international players. In these discussions, the EU can make its voice heard with credibility when our words are backed by a comprehensive and sound legislative framework for sustainable finance.

Commissioner McGuinness feels very strongly about the importance of financial literacy. You are active in national politics in Italy and are aware of the situation on the ground there. What do you think can be done to improve financial literacy and more generally explain the benefits and challenges of EU policymaking?

Financial literacy is a subject close to my heart. The lack of understanding of budgeting and money management in the private sphere is at the core of a lot of problems people experience on a daily basis. Often, financial problems lead to personal and social problems, which in turn exacerbate the financial problems. It is then very difficult to escape from such a vicious circle and become financial independent again.

Therefore, a good level of basic financial knowledge is crucial in today’s society. On the one hand, it would facilitate our objective of social inclusion. And on the other hand, I believe it to also be a prerequisite for a successful involvement of retail investors in the Capital Market Union (CMU) initiatives. For that reason, I am really happy to note that this is high on the Commissioner’s agenda.

Unfortunately, study after study concludes that the understanding of financial concepts remains extremely poor. I think certain processes should start early on and that a crucial role is played by the education system: dedicated information during schooling is an important tool to foster the financial literacy of the new generation, and we need to keep increasing our effort in this regard.

Women are still vastly outnumbered by men in the financial services sector, at least at higher levels. What has your experience been, as a woman, of building a career? And what steps do you think should be taken to get more women in leading roles in finance, both in industry and as regulators or supervisors?

Indeed, female representation in finance in economics remains, unjustifiably, unbalanced. But it’s important to acknowledge the progress made in recent years. In the field of finance and economics in the EU, more women are taking up top positions: we have the appointments of the President of the European Central Bank, the Commissioner for financial services and capital markets as well as more women in the high ranks of the ESAs. The same is happening across the Atlantic with the appointment of Janet Yellen as the US Treasury Secretary. This was not the case when I started my career. However, we can’t be complacent: more needs to be done to increase the number of women at all levels, and not only in European institutions, but in all the Members States, where we still see a huge gap in female participation in the economic and financial sector.

For decades, society has attached a strong stigma to women dealing with money. And even today, in many subtle ways, many parts of society keep telling women that earning money, managing or investing money is men’s work. We need to remove that stigma. Encourage more women to pursue economics and finance studies and careers. Promote a continuous debate around the issue, to better understand and remove all the obstacles.

That is why the ECON Committee has held and will continue to hold public events on this important matter with the high-level decision-makers mentioned above and many others. As decision-makers, we have also been working for a procedure based on gender-balance shortlists during the appointment process. I believe it is crucial for present and future generations of women to have role models, to overcome the stigma I mentioned earlier and to help build the confidence to take up an ambitious career in finance. I am also a strong advocate of comprehensive policies across the spectrum, tackling inequalities. Women need to be supported both in and outside the office. This issue can only be tackled with a wide cooperation of EU and national governments, in the public and private sectors, at company and individual levels.