A top international political priority currently is the fight against terrorist financing. Bolstering the anti-money laundering regime is seen as one way to tackle this and a number of decisions have been taken at international level to speed up AML reforms and improve co-operation between law enforcement. Although targeting terrorist financing, its impact will be felt in all areas of finance.
First up was the “The Egmont Group” a global network consisting of Financial Intelligence Units (FIUs) from 151 jurisdictions - including the UK’s National Crime Agency - with 19 other observers. The group met on 1 February 2016 and discussions focused on: improving the flow of financial intelligence; enabling access to sources of financial information; and, expanding the range of reporting entities subject to Suspicious Transaction Reports (STR).
Following the European Commission’s Action Plan to strengthen the fight against the financing of terrorism on 2 February (see our related blog, "Anti-money laundering - speeding up the pace of change"), national Economic and Finance ministers debated the plan on the 12 February. Ministers confirmed that they supported the accelerated implementation of the Fourth Money Laundering Directive (the Commission had urged Member States to bring forward implementation by six months to end of 2016) and backed further improvements to cooperation between national authorities responsible for clamping down on terrorist financing.
Ministers set out “Early 2016” as the time-frame for action in the following areas:
- Adopt an EU blacklist to identify high risk third countries with deficiencies in fighting money laundering and terrorist financing;
- Update the EU Anti-Money Laundering Directive to address targeted issues:
- Establish harmonised and enhanced due diligence measures for high risk third countries;
- Tackle the risks of virtual currency exchange platforms and pre-paid instruments;
- Propose centralised bank and payment account registers or electronic data retrieval systems for Member States;
- Improve access to information and exchange of information for Financial Intelligence Units
- Boost information sharing between Member States, the Commission and economic operators on how to implement restrictive measures such as UN sanctions.
Ministers also set the second half of 2016 as a time when the Commission should propose new EU legislation to harmonise the criminal sanctions for money laundering. Alongside new proposals for EU legislation against illicit cash movements, including possible limits on cash or assets carried or transported across borders. Ensuring mutual recognition by EU Members States of asset freezes and confiscations and an assessment of the need for additional EU legislation for freezing terrorist assets within the EU are also on the table for the latter part of 2016. 2017 cited as in which a report on money laundering and terrorism financing with recommendations to Member States will be published.
It is interesting that proposals to amend the Fourth Anti-Money Laundering Directive – already being described by some as the Fifth Money Laundering Directive – are already on the table given that the official deadline for implementation is 26 June 2017. Indeed, we have not yet seen any publication of the UK Treasury’s plans to amend the Money Laundering Regulations 2007 to implement this new Directive into national law. However, the political rhetoric remains strong with UK Home Secretary Theresa May addressing Security Alliance Partners (UK, the US, Australia, Canada and New Zealand) this week in Washington arguing that if we are to deal with this threat effectively, “we can no longer look simply to domestic solutions. There must be international cooperation, a common approach, free flows of intelligence and information, and the closing of technological gaps which the extremists exploit." She highlighted sharing of terrorist finance details as priority.
These are timely remarks given that the Financial Action Task Force (FATF) will meet this week to finalise a robust strategy to strengthen the global response to the current terrorist financing threat.