Europe is struggling to agree on how to tackle money laundering in the wake of high-profile scandals in the Baltic region.

Latvia, grappling with the aftermath of its third-biggest bank being closed down, is calling for a pan-European approach to fighting dubious financial flows. While it has the support of other small states, it hasn’t convinced Germany, which argues those powers are better kept at a national level.

Peters Putnins, head of Latvia’s Financial and Capital Market Commission, says no small European country could replicate the U.S. resources that exposed wrongdoing at the now-defunct ABLV Bank AS in February. He didn’t name the smaller nations that back Latvia’s stance.

“Europe together could definitely do it,” he said in an interview in Riga, Latvia’s capital. “Why hold that kind of infrastructure in each individual country?”

A lack of cooperation and information exchange between countries has limited Europe’s efforts to prevent illicit capital flows. Europol estimates that just 1 percent of about 120 billion euros ($145 billion) that are laundered annually in the EU are detected and recovered. Daniele Nouy, head of banking supervision at the European Central Bank, wants greater international coordination to boost detection.

German regulators say law enforcement isn’t well-suited to an international approach.

‘Better Understanding’

“Money laundering is mainly a matter of criminal law,” Thorsten Poetzsch, a chief executive director at German financial-markets supervisor BaFin, said in an interview in Frankfurt. “Anti-money-laundering provisions aren’t fully harmonized and risk profiles differ from country to country. A national supervisor therefore has a better understanding of the risks at stake in the individual member state.”

The 19-nation euro area has already made efforts to centralize supervision of its biggest lenders, handing responsibility to the ECB. EU officials in Brussels have taken the lead on laws to fight money laundering in the bloc. An agreement on the latest version of the rules, which extends the framework to virtual currencies, was reached in December.

But enforcement mostly happens at the national level. While the EU has started to cooperate more closely on fighting money laundering, the efforts aren’t enough, according to Laure Brillaud, a policy officer at Transparency International.

“Greater coordination and harmonization of national systems are needed to ensure effective information sharing, anti-money-laundering supervision and enforcement,” she said by email.

There have also been calls for the ECB to more closely monitor risks from lax internal procedures at some banks. Sven Giegold, a European Parliament member focusing on financial regulation, said the Frankfurt-based institution should impose extra capital charges on banks it finds wanting.

“Higher risks for financial crime should then lead to effective and significantly higher SREP surcharges,” he wrote to Nouy in a letter posted on his website. “I trust in your leadership to contribute to drain the swamp of dirty money that’s putting our banking union into disrepute.”

At an ECB supervisory board meeting this month, larger euro-region countries weren’t interested in unifying anti-money-laundering measures, according to Latvia’s Putnins, who attended. But smaller nations “would be happy to create something together,” he said.

It’s “very embarrassing to depend on the U.S. to do the job,” Nouy told the European Parliament last month when asked about ABLV. She called for “a European institution that’s implementing in a thorough, deep, consistent fashion this legislation in the euro area,” though not the ECB.