* EU-wide body under consideration after banking scandals
* EU finance ministers to discuss whether new rules needed
* Crypto risks flagged by supervisor; blacklisting softened
By Francesco Guarascio
BRUSSELS, Oct 2 (Reuters) - Banking scandals and growing crypto currency use have prompted European Union finance ministers to consider setting up a bloc-wide supervisor on money laundering at a meeting next week.
EU regulators were caught off guard last year by one of the largest money-laundering scandals ever, involving some 200 billion euros ($219 billion) in suspicious payments, between 2007 and 2015, through Danske Bank's tiny Estonian branch.
Despite several anti-money laundering overhauls, the bloc remains vulnerable, mostly because rules are applied less strictly in some of the 28 EU states, the European Commission, the bloc's executive arm, said in a report in July.
The bloc's finance ministers will therefore discuss at a meeting on Oct. 10 whether a single supervisor could be a solution, a document published on Wednesday said.
"How should issues related to inadequate supervision be addressed? Is the creation of a new EU body a valid way forward, or is any existing body the best option?" the Finnish presidency of the EU said in the paper that will guide the debate.
Despite criminal organisations frequently laundering the proceeds of their illegal activities abroad, the fight against financial crime is mostly dealt with by national authorities.
Cooperation between domestic supervisors has so far been insufficient, the commission said in July, strengthening the case for an EU-wide supervisor.
Ministers will also discuss whether a new overhaul of the rules is necessary and whether it would need to address risks not only in financial firms but also in other sectors at risk of money laundering, from artwork to football.
Risks in crypto and digital currencies will also need to be tackled, the head of the Belgian financial intelligence force, Philippe De Koster, said at a conference in Brussels.
Despite new EU rules to reduce risks on exchange platforms, most EU states have no legislation in place to counter money laundering through crypto assets, he added.
"We are often blind," he told Reuters, warning of dangers when cryptocurrencies are converted into euros or dollars, but also when they are exchanged between two virtual currencies.
The finance ministers will also discuss how to improve cooperation with countries outside the EU in tackling money laundering and the funding of terrorism.
The commission has proposed largely aligning the EU blacklisting of risky states to procedures at the Financial Action Task Force, the international body that sets criteria on identifying non-cooperative jurisdictions.
This proposal, contained in a document released on Wednesday, can be seen as a reversal from Brussels' earlier attempt to sidestep the FATF and enforce stricter rules.
The about-turn comes after the commission proposed to list earlier this year countries that were not listed by the FATF, including Saudi Arabia. That was struck down by EU states after pressure from Riyadh. ($1 = 0.9137 euros) (Reporting by Francesco Guarascio; Editing by Alexander Smith)