DID YOU KNOW?
Approximately, in 2014, 2.6 trillion US dollars of European financial wealth is unaccounted for, depriving EU citizens of the benefits they could receive from an annual 78 billion US dollars in tax revenue.
EDC News: EU fights Money Laundering & Terrorist Financing
The integrity, stability and reputation of the EU financial sector, international development and the proper functioning of the internal market are under threat from illegal activities (money laundering and terrorist financing) that utilise the EU financial system. As a means of preventing and strengthening EU's defences against these activities and their consequences (e.g. losses in tax revenue) the European Commission implemented the Anti-Money Laundering Directive (DIR 2005/60/EC; revised versions DIR 2015/849/EC, DIR 2018/843/EU). Modifications to the Directive strives to strengthen EU regulations and ensure their consistency with global anti-money laundering (AML) and counter-terrorist financing (CTF) standards, such as, the Financial Action Task Force. The primary modifications focus on:
- Risk based approach – Member States are required to demonstrate that they have taken appropriate steps to identify, assess, understand, and mitigate AML/CTF risk through commissioning national risk assessments, firms developing risk-based policies, and practitioners to conduct customer due diligence (CDD) in a risk-based manner.
- Ongoing monitoring – the Directive outlines factors for consideration/evidencing in conducting risk assessments for each customer, and how these risk assessments must be kept up-to-date.
- Beneficial ownership – legal entities (persons, companies) are required to hold adequate, accurate, and current information on their own beneficial ownership; the information should be stored in a central register located outside the company and in full compliance with EU law, thereby enhancing transparency.
- Strengthen collaboration between EU Financial Intelligence Units (FIU) – All 28 EU FIUs are connected and using FIU.net. The directive outlines Member States should ensure their FIUs exchange information freely and upon request, with authorised entities and other third-country financial intelligence units, within EU law.
- Counteracting new trends in the way illegal financial activities are carried out – Regulating virtual currencies, cryptocurrencies, pre-paid cards, high value goods (including oil, arms, precious metals)
- EU list on high-risk third countries – The European Commission is mandated to identify ‘high-risk third countries’ through examining their vulnerability and preventative measures for illegal financial practices.
In addition to the Directive, the European Commission is outreaching to third countries through collaborations, funding programmes (e.g. 'Countering Terrorism' programme), and promoting policies (e.g. Action Plan on Terrorist Financing) to combat money laundering and terrorist financing. Furthermore, the Instrument of Pre-Accession Assistance supports Balkan candidate countries in the development of their AML/CFT policies (e.g. Serbia).
For Further Information
- Legal documents:
- Council Directive on prevention of the use of the financial system for the purpose of money (DIR 91/308/EEC), EUR-Lex
- Council Decision on the arrangements for cooperation between financial intelligence units (FIU) of the Member States in respect of exchanging information (Decision 2000/642/JHA)
- Fourth Anti-Money Laundering Directive (DIR 2015/849/EU)
- Fifth Anti-Money Laundering Directive (DIR 2018/843/EU)
- Identifying high-risk third countries with strategic deficiencies (Regulation 2016/1675)
- Information accompanying tranfers of funds (Regulation 2015/847)
- European Commission adopts new list of third countries with weak anti-money laundering and terrorist financing regimes, European Commission – Press Release Database
- Anti-money laundering: Q & A on the EU list of high-risk third countries, European Commission – Press Release Database
- Money laundering and terrorist financing: Council return draft list of high risk countries to the Commission, European Council
- Preventing money laundering and terrorist financing across the EU – Diagram, European Commission
- Financial Intelligence Units – FIU.net, Europol
- Expert group on Money Laundering and Terrorist Financing, European Commission
- EU Policy on High-Risk Third Countries, EU Commission
- Anti-money laundering and counter terrorist financing, EU Commission
- Anti-money laundering: Q & A on the EU list of high-risk third countries, European Commission