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Money Laundering and Terrorist Financing – Challenges from a European Perspective

Money Laundering and Terrorist Financing – Challenges from a European Perspective. Public hearing on tax and financial havens 21 March 2012. Structure. What is Money Laundering and Terrorist Financing? Policy response What next?. Money Laundering/Terrorist Financing.

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Money Laundering and Terrorist Financing – Challenges from a European Perspective

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  1. Money Laundering and Terrorist Financing – Challenges from a European Perspective Public hearing on tax and financial havens 21 March 2012

  2. Structure • What is Money Laundering and Terrorist Financing? • Policy response • What next?

  3. Money Laundering/Terrorist Financing ML: The conversionof the proceedsof illicit activity into apparently “clean” assets. TF: The financing of: - terrorist acts - terrorists - terrorist organisations

  4. Placement Layering Integration How Does Money Laundering Work? – The Theory

  5. The Policy Response • FATF • UE

  6. FATF • Policy-makingbody • FATF standards • Mutual evaluations

  7. EU • Directive 2005/60/EC • Main features: • Prohibits money laundering and terrorist financing • Imposes customer due diligence and reporting obligations to financial and some non financial businesses and professions • Obliges Member States to establish a Financial Intelligence Unit • Protection of employees against threats or hostile actions • No tipping-off • Record keeping (5 years after end of relationship for CDD) • CDD and record keeping to be applied to branches and subsidiaries outside the EU • Compulsory supervision

  8. Directive 2005/60/EC • The directive has been transposed in all EEA countries • It is only one element in a broader legal framework which also comprises: • Regulation 1781/2006 on payer information accompanying transfers of funds • EU legal instruments on freezing of assets • Council Decision 2000/642 on FIUs cooperation etc. • Commission Directive of 1 August 2006

  9. Revision of the Directive 2005/60/EC • Evolution, not revolution • AMLD regimes basically work – but modifications necessary in light of new technologies, market changes and new threats. • EU legislation must be adapted to new international standards • Proposal of Directive: October 2012

  10. Conclusion • What next? • Towards the Fourth AMLD • FATF 4th Round • Developing effectiveness assessment • Reacting to new threats

  11. Tentative timing for revision of framework

  12. Thank you for your attention

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