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25.07.19 14 EURO European banks, states have serious dirty-money shortcomings - EU Commission THE European Commission said on Wednesday more should be done to counter the multi-billion-euro flow of dirty money in the European Union as major shortcomings have emerged in the way banks and governments handle the issue. After a recent string of mon- ey-laundering scandals at sev- eral lenders in the 28-country bloc, the EU reviewed existing rules and practices to identify the main shortfalls and counter illegal flows that Europol esti- mates could be more than 200 billion euros ($222.7 billion) a year. Under the review, whose results were published on Wednesday, the EU execu- tive commission assessed ten known cases of money laun- dering at banks which were reported mostly between 2012 and 2018. e case-studies included lenders that have been at the centre of large scandals such as Danske Bank, Denmark's big- gest bank, which has admitted to having handled through its Estonian branch 200 billion eu- ros ($225 billion) of suspicious transactions between 2007 and 2015 - as reported by Reuters last month e review also included lend- ers that have been shut because of money-laundering issues, like Latvia's ABLV, Malta's Pi- latus Bank and Cyprus' FBME Bank, and cases of financial crime that led to fines or finan- cial settlements at some of EU's largest banks, like Deutsche Bank and France's Societe Gen- erale. ($1 = 0.8981 euros) MONEY markets are pricing in a 54% chance of a 10 basis point cut on urs- day's ECB meeting. e probability rose after the euro- zone purchasing managers' index un- expectedly fell to a three-month low of 51.5 in July from 52.2 in June. Econo- mists polled by Reuters had expected a slight decline to 52.1. e 50 mark separates economic growth from contraction. e ECB could also signal further reductions down the road or a fresh round of quantitative easing (QE), in- vestors said. "Disappointing PMIs out of the euro area will only increase expectations fur- ther for (Mario) Draghi to deliver a dov- ish sounding message tomorrow," said Mohammed Kazmi, a portfolio manag- er at UBP. "He will be expected to strongly hint at both rate cuts and QE ahead of easing that is anticipated for September." e common currency was down 0.1% at $1.1137 after earlier hitting $1.1127, its lowest since May 30. e euro hit a two-year low of $1.1105 in May. Markets betting on ECB easing have lifted the Swiss franc, which traded at 1.0980 francs per euro, not far from the two-year high of 1.0972 reached on Tuesday. e surging franc is heaping pressure on Swiss officials to act to protect their export-heavy economy. e euro has shed 2% of its value this month as investors priced in the prob- ability of euro zone borrowing costs falling deeper into negative territory. A broadly stronger dollar also contributed to the single currency's woes. Expectations of lower interest rates in developed economies weighed on other currencies, such as the Australian dol- lar, which fell 0.5% to a two-week low of $0.6973. ree consecutive days of lower iron ore prices may also be hurting curren- cies sensitive to commodity prices like the Aussie, analysts said. e US dollar firmed after Washing- ton reached a deal to lift government borrowing limits, which analysts said could limit the U.S. Federal Reserve's appetite for rate cuts. e dollar was flat against a basket of currencies at 97.704, having edged up to a five-week high of 97.76 earlier fol- lowing gains of nearly 0.5% the previous day. e pound rose slightly from recent lows after Boris Johnson on Tuesday won the contest to be Britain's next prime minister, focusing investor atten- tion on the prospect of a no-deal Brexit. Some market watchers expect ster- ling to fall after eurosceptic Johnson's speech on Wednesday, when he takes over as prime minister. "Boris Johnson is deliberately pro- vocative... at would be enough to get people to worry," said Helen omas, chief executive of macroeconomic con- sulting firm BlondeMoney. Sterling was last up 0.3% at $1.2479, not far from the 27-month low of $1.2382 it hit last week. It rallied 0.4% against the euro to 89.290 pence. e euro fell to a two-month low against the dollar on Wednesday, hit by weak economic data and speculation that the European Central Bank may open the door to aggressive monetary policy easing as soon as this week Gloomy data sends euro to two- month low ahead of ECB meeting

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