EU tightens money laundering and terrorist financing rules
17 May 2018 revised by Bachir El Nakib (CAMS), Senior Consultant, Compliance Alert (LLC).
The European Council has adopted a directive to strengthen EU rules aimed at preventing money laundering and financing for terrorism
Changes to directive 2015/849 will hinder those trying to use financial systems for criminal gain, while maintaining legitimate and functioning payment systems. They were accepted in a meeting of the General Affairs Council without discussion yesterday.
The changes follow recent terrorist attacks in Europe, which have “brought to light emerging trends,” such as criminals’ use of new technologies and alternative finance systems that currently remain outside of the scope of EU law.
The risks of these financing systems, which include prepaid cards and virtual currencies, are one of the key areas the changes address.
Other key elements include broadening access to information on beneficial ownership to improve transparency in ownership of companies or trusts; cooperation between financial intelligence units and improving checks on transactions involving “high-risk third countries”.
"These new rules respond to the need for increased security in Europe by further removing the means available to terrorists", said Vladislav Goranov, minister for finance of Bulgaria, which is a current council presidency holder.
"They will enable us to disrupt criminal networks without compromising fundamental rights and economic freedoms,” he added.
Yesterday, the National Crime Agency (NCA) released its National Strategic Assessment, one of the key findings of which was that money laundering has the potential to cost the UK billions of pounds annually.
The assessment pointed to the significant threat “posed by the criminal exploitation of accounting and legal professionals involved with trust and company provision."
The assessment suggested that while there has been “little impact on criminal activity of international law enforcement cooperation” since the Brexit referendum vote, it is one of the “key drivers of uncertainty in the next five years.
Lynne Owens, director of the NCA, said that due to the “increasing sophistication of crime groups as well as the “changing nature of their geographical reach”, a coordinated response is now more important than ever.
In March, it was announced that the Treasury Committee will investigate the extent to which economic crime is affecting the UK, including claims that Russians are laundering “dirty money” through the UK property market.