FECIF Editorial

As the world awakens to a new reality, i.e., the triumphant return of Donald Trump to the White House, the deregulation process has well begun in the United States. Here's an example of the potential application of an AML rule, brought to a sudden halt by the intervention of the courts:

• On December 23, 2024, an article in the New York Times, alerted... New Anti-Money Laundering Measures Pass a Legal Roadblock. Millions of companies may have to report information about their owners to the Treasury Department by Jan. 1 under an appeals court ruling.
  
  Under the Corporate Transparency Act, an anti-money-laundering law that passed in 2020, companies would have had to turn over the identities of their “beneficial owners,” the people who own 25 percent or more of the company, or exercise significant control over it, by next year. But the law has been challenged in the courts. FinCEN (Financial Crimes Enforcement Network) has estimated that 32.6 million companies would need to register under the law, with at least three times that number of individuals that could be concerned.
   

• On December 27, 2024, another article in the New York Times warned that... Enforcement of Anti-Money-Laundering Law Blocked After Court Reversal. Businesses will not have to reveal their owners after an appeals court reversed a move that would have forced them to disclose the information by Jan. 1.
  
  The new order means that a nationwide injunction, by Judge Amos L. Mazzant III of the Eastern District of Texas, that bars enforcement of the Corporate Transparency Act while the law’s constitutionality is considered by the courts will remain in force.

 As much of the West is sinking in decline, it's appalling to have to observe Europe's eternal immobility while 'Rome burns'! Europe is failing economically, especially in the test of the digital age since it is unable to generate new technologies and large enough new companies for the 21st century’s needs. Not only the embrace of ruinous climate policies, in recent years, reduces the EU competitiveness, but the sizeable EU bureaucracy is preventing Europe from gaining its place among leading global actors.

The divergence between the U.S. and Europe in terms of regulation is very telling, as described by FT in this article. Between 2019 and 2024, the European Union (EU) produced 13,942 legal acts. In contrast, over a similar period, the USA produced just 3,725 legislative acts and adopted 2,202 resolutions.

Our continent's financial sector has been hard hit by this extreme European zeal, as even Mario Draghi, former head of the ECB (European Central Bank), commented in his Competitiveness Report, referring to Basel III... 'The EU’s prudential regulation — not replicated elsewhere — limits the EU capital available to finance innovation.'

On December 17, 2024, the Financial Times published this article on wealth management in Europe: 'The relentless advance of American asset managers in Europe' ... that stated: 'Over the past decade, assets under management by US groups in the UK and Europe have more than doubled, from $2.1 billion in 2014 to $4.5 billion at the end of September 2024, according to ISS Market Intelligence'.

Finally, EFAMA has provided us with the following information in its latest Asset Management in Europe report (16th edition):

• Assets under management should reach a record 33,000 billion euros by 2024. Profit margins have fallen sharply.
   

• The UK is Europe's largest asset management market, followed by France, Switzerland, Germany, the Netherlands and Italy.
   

• According to EFAMA calculations based on McKinsey data, European asset managers will have managed around 32% of all European financial assets by the end of 2023.

This latest development confirms the advance of American asset managers on our continent.

Much hope is pinned on the development of the RIS (Retail Investment Strategy) and the CMU (Capital Market Union) to lighten regulation and enable the financing of future growth in the European economy.

However, American asset managers excel mainly via 'big scale' platforms, which offer a wide variety of investment products (active, index, technology and private markets) while keeping costs as low as possible.

It's clear, then, that Europe is facing the great American wave economically and strategically (defense) more than at any time in decades. Remaining passive and letting the European establishment merely reject correct and important criticisms of misguided European foreign and domestic policies would be undoubtedly ruinous, as it would translate for Europe into abdicating its role in history. Instead of merely trying to adapt to MAGA and the deregulation wave coming from the United States, wouldn't it be better for the EU to innovate by significantly reducing regulation in general and begin with the financial sector? Regulation, especially too much of it, is always too costly and it slows down any economic evolution effort. Now more than ever, the need to gain in innovation and productivity has become an imperative goal that the EU should pursue.