Legal framework European Union
The European Commission conducts a risk assessment to identify and respond to risks affecting the EU internal market. It facilitates global solutions to respond to these threats at the international level. The European Union has adopted robust anti-money laundering and terrorist financing legislation that supports this international effort. The Commission ensures the effective enforcement of this legislation by reviewing the transposition of EU legislation and working with networks of competent authorities .
On July 24, 2019, the European Commission adopted a communication entitled “Towards Better Implementation of the EU Framework for Combating Money Laundering and Terrorist Financing”, accompanied by four reports.
On May 7, 2020, the European Commission adopted an action plan for a comprehensive Union policy to prevent money laundering and terrorist financing, based on six principles. To gather the views of citizens and stakeholders on these measures, the Commission began public consultations in parallel with the adoption of this action plan. Feedback is welcomed by August 26, 2020.
EU legal framework against money laundering and terrorist financing
It is imperative that gatekeepers (banks and other obligated entities) implement measures to prevent money laundering and terrorist financing. The traceability of financial information has an important deterrent effect. The European Union adopted the first Anti-Money Laundering Directive in 1990 to prevent the misuse of the financial system for money laundering purposes. It provides that obligated entities must apply customer due diligence requirements when entering into business relationships (i.e., identify and verify customer identities, track transactions and report suspicious transactions). This legislation has been continuously reviewed to reduce the risks associated with money laundering and terrorist financing.
2015 modernized regulatory framework
In 2015, the EU adopted a modernized legal framework covering
- Directive (EU) 2015/849 on the prevention of the use of the financial system for money laundering or terrorist financing (4 Anti-Money Laundering Directive);
- Regulation (EU) 2015/847 on payer information accompanying a transfer of funds - makes transfers of funds more transparent, thereby helping law enforcement to track terrorists and criminals.
Both tools take into account The 2012 Financial Action Task Force (FATF) Recommendations , and go further on a number of issues to promote the highest anti-money laundering and anti-terrorist financing standards ..
5 Anti-Money Laundering Directive
19 June 2018 5 The Anti-Money Laundering Directive (Directive (EU) 2018/843), which amended the 4 Anti-Money Laundering Directive, was published in the Official Journal of the European Union. Member states were to postpone this Directive by 10 January 2020.
These amendments made significant improvements to better equip the Union to prevent the financial system from being used for money laundering and terrorist financing.
These amendments were made in
- increase transparency by creating publicly available registries of companies, trusts and other legal entities;
- empower EU financial intelligence units and provide them with access to a wealth of information to carry out their tasks;
- restrict anonymity for virtual currencies and wallet providers, as well as prepaid cards;
- expand the criteria for assessing high-risk third countries and improve guarantees for financial transactions to and from such countries;
- create account registries or search engines at central banks in all Member States;
- improve cooperation and information between and between anti-money laundering supervisors and prudential supervisors and the European Central Bank.
See See also Fact sheet on major changes 5 of the Anti-Money Laundering Directive.