Combating financial crime: Commission revises rules to combat money laundering and terrorist financing

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The European Commission has presented an ambitious set of legislative proposals aimed at strengthening EU rules on combating money laundering and terrorist financing (AML / CFT). The package also includes the proposal to create a new EU authority to fight money laundering. This package is part of the Commission’s commitment to protect EU citizens and the EU financial system against money laundering and terrorist financing. The objective of this package is to improve the detection of suspicious transactions and activities, and to close loopholes used by criminals to launder illicit proceeds or finance terrorist activities through the financial system.

As the EU reminds Security Union Strategy for 2020-2025, strengthening the EU framework for combating money laundering and terrorist financing will also help protect Europeans against terrorism and organized crime.

The measures greatly improve the existing European framework by taking into account new and emerging challenges linked to technological innovation. These include virtual currencies, more integrated financial flows in the single market and the global nature of terrorist organizations. These proposals will help create a much more coherent framework to facilitate compliance for operators subject to AML / CFT rules, in particular for those active across borders.

Today’s package consists of four legislative proposals:

An economy that works for people Executive Vice President Valdis Dombrovskis said: “Every new money laundering scandal is one scandal too many – and a red flag that our work to close the loopholes in our financial system is not yet finished. We have made enormous progress in recent years and our EU anti-money laundering rules are now among the strictest in the world. But now they need to be applied consistently and closely monitored to make sure they really bite. That is why we are taking these bold steps today to close the door on money laundering and prevent criminals from lining their pockets with ill-gotten gains. “

A new EU LAB Authority (AMLA)

At the heart of today’s legislative package is the creation of a new EU authority that will transform AML / CFT supervision in the EU and strengthen cooperation between Financial Intelligence Units (FIUs). The new Anti-Money Laundering Authority (AMLA) at EU level will be the central coordinating authority for national authorities to ensure that the private sector applies EU rules correctly and consistently. AMLA will also help FIUs improve their capacity to analyze illicit flows and make financial intelligence a key source for law enforcement.

In particular, AMLA:

  • Establish a single integrated AML / CFT surveillance system across the EU, based on common supervisory methods and the convergence of high supervisory standards;
  • directly supervise some of the riskiest financial institutions which operate in a large number of Member States or require immediate action to face imminent risks;
  • monitor and coordinate the national supervisors responsible for other financial entities, as well as coordinate the supervisors of non-financial entities, and;
  • support cooperation between national Financial Intelligence Units and facilitate coordination and joint analyzes between them, in order to better detect illicit financial flows of a cross-border nature.

A single EU collection of rules for AML / CFT

The EU Single Code for AML / CFT will harmonize AML / CFT rules across the EU, including, for example, more detailed rules on due diligence customers, beneficial ownership and the powers and duties of controllers and financial intelligence units (FIUs). Existing national bank account registers will be connected, allowing FIUs to access information on bank accounts and safes more quickly. The Commission will also provide law enforcement authorities with access to this system, speeding up financial investigations and the recovery of criminal assets in cross-border cases.. Access to financial information will be subject to strong guarantees in Directive (EU) 2019/1153 on the exchange of financial information.

Full application of EU AML / CFT rules to the crypto industry

Currently, only certain categories of crypto-asset service providers are included in the scope of EU AML / CFT rules. The proposed reform will extend these rules to the entire crypto industry, requiring all service providers to exercise due diligence towards their customers. Today’s amendments will ensure full traceability of transfers of crypto assets, such as Bitcoin, and allow the prevention and detection of their possible use for money laundering or terrorist financing. In addition, anonymous crypto asset wallets will be banned, fully applying EU AML / CFT rules to the crypto industry.

EU limit of € 10,000 on large cash payments

Large cash payments are an easy way for criminals to launder money because it is very difficult to detect transactions. This is why the Commission has today proposed an EU-wide limit of 10,000 euros for large cash payments. This EU-wide limit is high enough not to jeopardize the euro as legal tender and recognizes the vital role of cash. Limits already exist in around two-thirds of the Member States, but the amounts vary. National ceilings below 10,000 € may remain in place. By limiting large cash payments, criminals have a harder time laundering dirty money. In addition, the provision of anonymous crypto-asset wallets will be prohibited, just as anonymous bank accounts are already prohibited by EU AML / CFT rules.

Third country

Money laundering is a global phenomenon that requires strong international cooperation. The Commission is already working closely with its international partners to combat the circulation of dirty money around the world. The Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog, makes recommendations to countries. A country listed by the FATF will also be listed by the EU. There will be two EU lists, a “black list” and a “gray list, reflecting the FATF list. Following registration, the EU will apply measures proportionate to the risks posed by the country. The EU will also be able to list countries which are not listed by the FATF, but which pose a threat to the EU financial system on the basis of an autonomous assessment.

The variety of tools that the Commission and the LBA can use will allow the EU to keep pace with a complex and rapidly changing international environment with rapidly evolving risks.

Next steps

The legislative package will now be discussed by the European Parliament and the Council. The Commission hopes for a rapid legislative process. The future AML Authority should be operational in 2024 and will start its direct supervision work a little later, once the directive has been transposed and the new regulatory framework begins to apply.

context

The complex issue of tackling the flow of dirty money is not new. The fight against money laundering and terrorist financing is vital for financial stability and security in Europe. Legislative gaps in one Member State have an impact on the EU as a whole. That is why EU rules must be implemented and monitored in an efficient and consistent manner to fight crime and protect our financial system. It is of the utmost importance to ensure the effectiveness and consistency of the EU AML framework. Today’s legislative package implements the commitments made in our Action plan for a comprehensive Union policy on the prevention of money laundering and terrorist financing adopted by the Commission on May 7, 2020.

The EU framework against money laundering also includes the Regulation on the mutual recognition of freezing and confiscation orders, the Directive on combating money laundering through criminal law, the Directive laying down rules on use of financial and other information to fight serious crime, the Public Prosecutor’s Office and the European System of Financial Supervision.

More information

Fight against money laundering and terrorist financing

Proposal on centralized registers of bank accounts

Questions and answers

Fact sheet

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