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Anti-money laundering and the changing face of public-private cooperation

Anti-money laundering and the changing face of public-private cooperation Tackling the proceeds of smuggling. Dr. Benjamin Vogel. Overview. Sketching Anti-Money Laundering Smuggling and AML European law and the global framework The purpose of private sector reporting

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Anti-money laundering and the changing face of public-private cooperation

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  1. Anti-money laundering and the changing face of public-private cooperation Tackling the proceeds of smuggling Dr. Benjamin Vogel

  2. Overview • Sketching Anti-Money Laundering • Smugglingand AML • European lawandthe global framework • The purposeof private sectorreporting • The roleofstateintelligence • The placeofthe Financial Intelligence Unit AML and the changing face of public-private cooperation

  3. I. Sketching Anti-Money Laundering AML and the changing face of public-private cooperation

  4. I. Sketching Anti-Money Laundering • Criminal Justice • Private Sector • Private sector customer due diligence • Private sector reporting obligations • Financial Intelligence Units (FIUs) • Supervisory authorities AML and the changing face of public-private cooperation

  5. II. Smugglingand Anti-Money Laundering AML and the changing face of public-private cooperation

  6. II. Smugglingand Anti-Money Laundering • Smuggling as predicate offence: Article 2 para. 1 (p) of Directive (EU) 2018/1673 of 23 October 2018 on combating money laundering by criminal law. • Smuggling as a means of laundering • Financial Intelligence Units oftenclosetocustomsauthorities (in Germany integrated in theCustomsCriminal Office) AML and the changing face of public-private cooperation

  7. iii. European lawandtheglobal AML framework AML and the changing face of public-private cooperation

  8. iii. European lawandtheglobal AML framework • Financial Action Task Force International Standards, updated 2018 • Directive (EU) 2015/849 of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing • Directive (EU) 2018/843 of 30 May 2018 amending Directive (EU) 2015/849 • Emancipationofthe EU legal framework (esp. beneficialownershipregistries, EU listof high riskthird countries) AML and the changing face of public-private cooperation

  9. iii. European lawandtheglobal AML framework • Global AML architecturelargelyinspiredby US legal concepts • Tensionsbetweencommonlawinstrumentsandcontinentalsystems • Major pointsofcontention: • Data protectionlaw • Inquisitorialproceduralsystems • Institutionalculturesofpublicauthorities AML and the changing face of public-private cooperation

  10. iii. European lawandtheglobal AML framework • The purposeof AML evolvingover time through an expansionofpredicatecrimes • Transnational definitionofmoneylaunderinghighlyintent-focused • Flexibilitytothedetrimentofclearlydefinedcriminalpolicy AML and the changing face of public-private cooperation

  11. IV. The purposeof private sectorreporting AML and the changing face of public-private cooperation

  12. IV. The purposeof private sectorreporting Status quo • Trend towards an everincreasingamountofsuspiciousactivitiesreports(“quantitative” approach) • Relevant degreeofsuspicionremainingratherunspecific • Reporting regularlyleadingtothesuspensionof a transaction AML and the changing face of public-private cooperation

  13. IV. The purposeof private sectorreporting Deficitsofthecurrentregime • Proportionalityofdatacollection • Low qualityofsuspiciousactivitiesreports • De-riskingofclientsby private entities AML and the changing face of public-private cooperation

  14. IV. The purposeof private sectorreporting Policyoptions • Combining quantitative and qualitative approaches • Unusualactivitiesreportswithlowsuspicionthresholdwithoutleadingto a suspensionoftransactions • Suspiciousactivitiesreportsonceobligedentitydecides not togoaheadwith a transactionorbusinessrelationship • Making useof private sectorasintelligenceprovideraswellasgatekeeper AML and the changing face of public-private cooperation

  15. V. The roleofstateintelligence AML and the changing face of public-private cooperation

  16. V. The roleofstateintelligence Status quo • Private sectorexpectedtoidentifymoneylaunderinglargly on itsown • Beyondtypologiesonly limited flowofintelligencefromstateto private sector • Oftenconflictingpoliticaldemandstopreventcrimeandfacilitatebusinessopportunities AML and the changing face of public-private cooperation

  17. V. The roleofstateintelligence Deficitsofthecurrentregime • Anonimityofclientsandbeneficialownersremainswidespread • Limited abilitytounderstandoriginoffunds, especiallywhenoriginatingfromabroad • Oftenno legal basistoprovide private sectorwithcase-specificintelligence AML and the changing face of public-private cooperation

  18. V. The roleofstateintelligence Policyoptions • Allowingfrothesharingofinformationfromongoingcriminalinvestigationswith private sector • As a resultmoretargetedcustomer due diligenceby private sector • Customer due diligenceisesentialytransformedfrombeing a merelyprecautionarymeasuretobecome a monitoringofsuspects AML and the changing face of public-private cooperation

  19. V. The roleofstateintelligence Obstacles • Need toeffectivelyprotectthesecrecyofjudicialinvestigations • Need toprotectcitizensfrombeingunjustlytargetedandstigmatised on thebasisofunreliableintelligence • Need topreventmisuseof sensitive databy private sector AML and the changing face of public-private cooperation

  20. VI. The placeofthe Financial Intelligence Unit AML and the changing face of public-private cooperation

  21. VI. The placeofthe Financial Intelligence Unit Status quo • Various institutional shapes from country to country • Key tasks of FIU remain ambiguous • Impossibility to analyse most private sector reports AML and the changing face of public-private cooperation

  22. VI. The placeofthe Financial Intelligence Unit Deficits of the current regime • Ambiguity of the relationship between criminal justice and FIU • Powers of FIUs remain insufficiently defined • Evidentiary value of FIU reports unclear AML and the changing face of public-private cooperation

  23. VI. The placeofthe Financial Intelligence Unit Policyoptions • Strengtheningthe FIUs abiitytoconduct operational analyses • Limitingcriminaljusticeaccessto FIU data • Strengtheningthe FIUs autonomyasregardsdataexchange AML and the changing face of public-private cooperation

  24. VI. The placeofthe Financial Intelligence Unit Obstacles • Proportionalityofpre-criminalsuspicioninvestigations • Possiblereluctanceofcriminaljusticeauthoritiestosharedatawith FIU • Judicialremediesagainst FIU dataprocessing AML and the changing face of public-private cooperation

  25. Thank you for your attention! AML and the changing face of public-private cooperation

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