New set of proposals in the fight against money laundering

posted in: EU news

image name

On 7 May 2020, the European Commission a package of initiatives in the fight against money laundering and the financing of terrorism. This package consists mainly of the following instruments:

1) An Action Plan for a Comprehensive EU Policy on the Prevention of Money Laundering and the Financing of Terrorism, in which it outlines the initiatives it wishes to undertake in this area over the next 12 months. The Commission intends to work around the following axes:

o Ensure the effective implementation of the existing European framework, in particular by continuing to monitor the transposition of the directives in force by the Member States and by assessing the application and capacity of Member States to prevent money laundering in the framework of the European Semester. The adoption of country-specific recommendations for AML is planned for the second quarter of 2020.

o Present in the first quarter of 2021 a draft regulation for a more uniform application of the European framework in this field. The Regulation should at least include provisions setting out the list of obliged entities, the obligations of due diligence vis-à-vis customers, internal controls, reporting obligations, as well as provisions relating to the beneficial ownership registries and the central bank’s accounting mechanisms. A more harmonised approach to the identification of politically exposed persons should also be considered. Other measures could be to facilitate the use of digital customer identification remotely.

o Create a European Supervisory Authority to integrate, complement and strengthen the coordination of national systems. National supervisory authorities will continue to be an essential part of this system and will remain responsible for most day-to-day checks. The establishment of the European core of this system is a priority, and its functions, competences and interaction with national supervisors will have to be clearly defined in a legislative proposal, announced for the first quarter of 2021. The task of monitoring at EU level could be entrusted either to an existing European agency, namely the European Banking Authority, or to a new specialised body.

o Establish a support and cooperation mechanism for the Financial Intelligence Units. To this end, the Commission will present proposals to establish an EU coordination and support mechanism for FIUs in the first quarter of 2021, after assessing the options for its role and structure.

o Strengthen criminal law provisions at EU level and the exchange of information, while ensuring respect for data protection and confidentiality. The role of public-private partnerships (PPP) should be encouraged to the extent possible between law enforcement agencies, FIUs and the private sector. This can range from the exchange of information on typologies and trends to the exchange of operational information on suspects by law enforcement agencies with the obliged entities, in order to control the transactions of these suspects. Any information sharing including personal data should be in full compliance with data protection legislation and respect the mandates of the authorities concerned. The Commission will publish PPP guidelines by the first quarter of 2021.

o Strengthen the international dimension of the European framework to combat money laundering and the financing of terrorism. A new methodology on the assessment of high-risk third countries is published together with this action plan. The Commission will continue to work with Member States and strengthen its participation in the FATF so that the EU can play a more important role at global level.

2) A public consultation on the various options mentioned in the above action plan was launched at the same time as the Action Plan in order to enable all interested parties to respond to each of the measures proposed by the Commission and to give their views on how best to achieve the desired results in each case. The deadline to contribute is 29 July.

3) A new methodology for identifying third countries with strategic flaws in the fight against money laundering and terrorist financing, which replaces the methodology for identifying high-risk third countries published in June 2018.

4) An updated list of third countries considered to be at high risk of laundering and terrorist financing, drawn up in accordance with the old methodology. This new list is now more consistent with the lists published by the FATF.The countries on the list are Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Panama and Zimbabwe. The countries that have been removed from the list are Bosnia and Herzegovina, Ethiopia, Guyana, the Lao People’s Democratic Republic, Sri Lanka and Tunisia. The Commission amended this list by means of a delegated regulation. It will now be submitted to the European Parliament and the Council for approval within one month (with a possible extension of one month).

All documents and more detailed information are available at https: //