On 5 February 2013, the European Commission adopted two proposals to reinforce the European Union's existing rules on anti-money laundering and fund transfers. These proposals, if implemented, will result in the strengthening of the existing AML regime in Europe. The proposals include:
- A draft directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (the “4th AML Directive”);
- A regulation on information accompanying transfers of funds to secure "due traceability" of these transfers.
Both proposals take into account the latest recommendations of the Financial Action Task Force ("FATF"), the world anti-money laundering body, and go further in a number of fields to promote the highest standards for anti-money laundering and counter terrorism financing.
In particular, the 4th AML Directive provides for a more targeted and focussed risk-based approach to customer due diligence and includes proposals to:
- improve clarity and consistency of the rules across the Member States by providing a clear mechanism for identification of beneficial owners. In particular, companies will be required to maintain records as to the identity of those who stand behind the company in reality;
- improve clarity and transparency of the rules on customer due diligence in order to have in place adequate controls and procedures, which ensure a better knowledge of customers and a better understanding of the nature of their business. In particular, the Commission has said that it is important to make sure that simplified procedures are not wrongly perceived as full exemptions from customer due diligence. The provisions dealing with politically exposed persons, i.e. people who may represent higher risk by virtue of the political positions they hold, are also expanded to now also include “domestic” (those residing in EU Member States) (in addition to 'foreign') politically exposed persons and those in international organisations;
- extend its scope to address new threats and vulnerabilities by including of the gambling sector, the former directive covered only casinos, and by including an explicit reference to tax crimes;
- promote high standards for anti-money laundering by going beyond the FATF requirements in bringing within its scope all persons dealing in goods or providing services for cash payment of €7,500 or more, as there have been indications from certain stakeholders that the current €15,000 threshold was not sufficient; and
- strengthen the cooperation between the different national Financial Intelligence Units ("FIUs") whose tasks are to receive, analyse and disseminate to competent authorities reports about suspicions of money laundering or terrorist financing.
The two proposals foresee a reinforcement of the sanctioning powers of the competent authorities by introducing a set of minimum principle-based rules to strengthen administrative sanctions and a requirement for them to coordinate actions when dealing with cross-border cases.
The European Commission organised a public hearing on 15 March 2013 where the main changes in the international framework as well as the 4th AML Directive were debated among various groups of stakeholders. The next steps will involve the two proposals being adopted by the European Parliament and the Council of Ministers under the ordinary legislative procedure.