On 11 October 2018, the Council of the European Union adopted a proposed Directive on combatting money laundering by criminal law, which introduces new criminal law provisions relating to money laundering and the financing of terrorism. The new proposed Directive complements and reinforces the Fourth Anti-Money Laundering Directive (EU) (2015/849) (and its amendments introduced by the Fifth Anti-Money Laundering Directive) by, amongst other measures, requiring that EU Member States transpose the following elements into their criminal legislation:
- harmonized definitions of criminal offences relating to money laundering (art. 3), including aiding, abetting, inciting and attempting such offences (art. 4);
- a penalty for natural persons of a maximum term of imprisonment of 4 years, potentially combined with additional sanctions or measures (art. 5);
- the liability of legal persons, which may face criminal and non-criminal fines and sanctions (e.g., exclusion from public aid, placement under judicial supervision, judicial winding-up) (art. 7 and 8);
- the mitigation of risks and challenges posed by the use of virtual currencies; and
- aggravating circumstances applicable to criminal organizations or to offences conducted in the exercise of certain professional activities (art. 6).
The Directive also aims to enhance EU Member States’ cooperation by setting uniform provisions regarding investigative tools (art. 11) and rules to determine which Member State has jurisdiction (art.10) when an offense falls within the jurisdiction of more than one Member State. EU Member States will have 24 months to transpose the Directive into national law once it is published in the Official Journal of the EU.
Under the proposed Directive, legal entities implicated in certain money laundering offenses may be held liable and face “effective, proportionate and dissuasive sanctions” from EU Member States, including criminal and non-criminal fines. Accordingly, both financial and non-financial institutions should consider reinforcing their existing AML/CFT policies and procedures and internal controls to mitigate the risk of a criminal proceeding being initiated against them by competent authorities in the EU Member States in which they operate.