EU Tackles Money Laundering, Tax Avoidance And Terrorism Financing
The European Union's Fourth Anti-Money Laundering Directive entered into force as of the 26th of June 2017.
The directive strengthens the existing rules and will make the fight against money laundering and terrorism financing more effective. It also improves transparency to prevent tax avoidance. This comes as discussions with the European Parliament and the Council on extra measures further reinforcing the Directive are already at an advanced stage.
FransTimmermans,First Vice-President, said: "Laundered money is oxygen to crime, terrorism and tax-avoidance. We need to cut off its supply as best we can. Today's stronger rules are a big step forward but we now need quick agreement on the further improvements the Commission proposed last July."
The Commission has also published a report which will support Member State authorities in better addressing money laundering risks in practice. As required by the new directive, the Commission assessed the money laundering and terrorist financing risks of different sectors and financial products. The report identifies the areas most at risk and the most widespread techniques used by criminals to launder illicit funds.
"Laundered money is oxygen to crime, terrorism and tax-avoidance. We need to cut off its supply as best we can."
VěraJourová, Commissioner for Justice, Consumers and Gender Equality said: “Terrorists and criminals still find ways to finance their activities and to launder illicit gains back into the economy. The new rules as of today are crucial to closing further loopholes. I urge all Member States to put them in place without delay: lower standards in one country will weaken the fight against money laundering and terrorist financing across the EU. I also call for quick agreement on the further revisions proposed by the Commission following the "Panama Papers" to increase transparency of beneficial ownership."
The Fourth Anti-Money Laundering reinforces the existing rules by introducing the following changes:
In July 2016, the Commission adopted a proposal to further reinforce these EU rules on anti-money laundering to counter terrorist financing and increase transparency about who really owns companies and trusts. The Commission calls on the European Parliament and the Council to finalise this legislative work as soon as possible, so the new rules can enter into force quickly. Building on the Fourth Anti-Money Laundering Directive, these new rules will create a robust EU anti-money laundering framework.
The Supranational Risk Assessment Report is a tool to help Member States identify, analyse and address money laundering and terrorist financing risks. It analyses the risks in the financial and non-financial sector and looks also into newly emerging risks such as virtual currencies or crowdfunding platforms.
Finally the Commission also commits to examining options to enhance the operation and cross-border cooperation of Financial Intelligence Units.
“Terrorists and criminals still find ways to finance their activities and to launder illicit gains back into the economy. The new rules as of today are crucial to closing further loopholes."
The new anti-money laundering framework consists of two legal instruments ‘The Fourth Anti-Money Laundering Directive' and ‘the Fund Transfers Regulation', both adopted on 20 May 2015.
In July 2016, the Commission presented a proposal to better counter the financing of terrorism and to ensure increased transparency of financial transactions following the so-called "Panama Papers" revelations (IP/16/2380).
These amendments aim at ensuring a high level of safeguards for financial flows from high-risk third countries, enhancing the access of Financial Intelligence Units to information, including centralised bank account registers, and tackling terrorist financing risks linked to virtual currencies and pre-paid cards. The proposal is currently in negotiations in the Council and the European Parliament and is expected to be adopted in the course of 2017.