you're reading...
PUBLICATIONS

The revision of EU anti-money laundering tools

Following developments in international anti-money laundering (AML) standards, the European Commission has proposed to revise two major EU instruments in order to strengthen the AML framework and, at the same time, make it more flexible.

EU anti-money laundering efforts in the international context

The revision of EU anti-money laundering tools

© Jürgen Fälchle / Fotolia

Non-binding, but universally recognised recommendations of the Financial Action Task Force (or FATF, an intergovernmental body set up in 1989) stand out as a particularly important set of international AML standards. They are regularly updated in response to the evolution of criminal activities, and to redefine the resultant priorities. The most recent edition of these standards (February 2012) includes recommendations related to countering not only money laundering, but also terrorist financing and − for the first time − the proliferation of weapons of mass destruction.

The EU participates in elaborating the FATF standards and has incorporated them in European law through three successive AML Directives. The last of these, Directive 2005/60/EC, has been in force since 2005. It applies to all financial institutions, as well as an array of other actors including auditors, notaries, real estate agents, and casinos. It has established a preventive system whereby these entities and professionals are under an obligation (known as “customer due diligence”) to check the identity of their customers and report suspicious transactions to so-called financial intelligence units (FIUs). The Directive is complemented by other instruments, including the 2006 Funds Transfers Regulation which laid down rules for payment service providers on the information on the payer required to accompany all transfers of funds.

European Commission proposals

With the FATF concluding the fundamental revision of its recommendations in 2012, the Commission undertook a parallel assessment of the EU’s own AML framework. As a result, it made proposals in 2013 to amend both the third AML Directive and the Funds Transfer Regulation, in line with the revised FATF standards. The idea was to create a strengthened, yet more flexible system through applying a more targeted risk-based approach. This entails the possibility of Member States (MS) using enhanced measures for high-risk sectors or activities and simplified ones for those perceived as low-risk.

The proposed directive therefore tightens the rules on customer due diligence and introduces an obligation to take additional precautions when dealing with all politically exposed persons (prominent public figures whose position makes them more susceptible to attempts at corruption) − not just foreign ones, as currently. It also seeks to enhance the clarity and accessibility of information on the beneficial owner(s), i.e. the natural person on whose behalf a transaction is being conducted and/or any natural person who ultimately owns or controls the customer entity. Furthermore, the proposed directive adds tax crimes to those in relation to which money laundering is criminalised (“predicate offences”).

The proposed regulation follows FATF recommendation No 16 on wire transfers, stating that financial institutions should include accurate information on both the originator and the beneficiary, to remain with the wire transfer throughout the payment chain.

European Parliament

The two proposals were referred to Parliament’s Economic and Monetary Affairs, and Justice, Home Affairs and Civil Liberties Committees which meeting jointly under Rule 51 adopted the two reports in February. The rapporteurs are Krišjānis Kariņš (EPP, Latvia) and Judith Sargentini (Greens/EFA, the Netherlands) for the directive and Mojca Kleva Kekuš (S&D, Slovenia) and Timothy Kirkhope (ECR, UK) for the regulation.

About EPRSauthor

European Parliamentary Research Service of the European Parliament. The EPRS offers the best available research and analytical support to Members of the European Parliament, their staff, parliamentary committees and, of course, to you!

Discussion

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Download the EPRS App

EPRS App on Google Play
EPRS App on App Store
What Europe Does For You
EU Legislation in Progress
Topical Digests
EPRS Podcasts

Enter your email address to follow this blog and receive notifications of new posts by email.

Join 3,305 other followers

Disclaimer and Copyright statement

The content of all documents (and articles) contained in this blog is the sole responsibility of the author and any opinions expressed therein do not necessarily represent the official position of the European Parliament. It is addressed to the Members and staff of the EP for their parliamentary work. Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the European Parliament is given prior notice and sent a copy.

For a comprehensive description of our cookie and data protection policies, please visit Terms and Conditions page.

Copyright © European Union, 2014-2019. All rights reserved.

%d bloggers like this: