ISSN 2330-717X

EU Tightens Controls On Money Laundering And Terrorist Financing

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EU ambassadors confirmed Wednesday a political agreement reached between the presidency and the European Parliament on strengthened EU rules to prevent money laundering and terrorist financing.

The draft directive has two main objectives: preventing the use of the financial system for the funding of criminal activities; and strengthening transparency rules to prevent the large-scale concealment of funds.

The aim is to close down criminal finance without hindering the normal functioning of financial markets and payment systems. Amending directive 2015/849, the agreed text seeks to balance the need for increased security with the protection of fundamental rights and economic freedoms.

The proposal is part of a Commission action plan against terrorist financing, established in 2016 following a spate of terrorist attacks in Europe.

“Today’s agreement is an important step in removing the means available to terrorists”, said Toomas Tõniste, minister for finance of Estonia, which currently holds the Council presidency. “It contains new measures that will help the authorities to better track financial flows and disrupt the financing of criminal networks”

The main changes to directive 2015/849 involve enhanced access to beneficial ownership registers, so as to improve transparency in the ownership of companies and trusts. The registers will also be interconnected to facilitate cooperation between member states.

Access to information on beneficial ownership is foreseen as follows: public access to beneficial ownership information on companies; access on the basis of ‘legitimate interest’ to beneficial ownership information on trusts and similar legal arrangements;
public access upon written request to beneficial ownership information on trusts that own a company that is not incorporated in the EU; and Member states will retain the right to provide broader access to information, in accordance with their national law.

Additionally, the agreement addresses risks linked to prepaid cards and virtual currencies. The threshold for identifying the holders of prepaid cards is lowered from €250 to €150, and customer verification requirements are extended. Virtual currency exchange platforms and custodian wallet providers will have to apply customer due diligence controls, ending the anonymity associated with such exchanges;

Another goal is improving cooperation between the member states’ financial intelligence units. FIUs will have access to information in centralised bank and payment account registers, enabling them to identify account holders;

There are also improved checks on risky third countries. The Commission has established and regularly updates a harmonised list of non-EU countries with deficiencies in their anti-money laundering prevention regimes. Additional due diligence measures will be required for financial flows from these countries. The list builds on that established at international level by the Financial Action Task Force.

Parliament and Council will now be called on to adopt the proposed directive at first reading.


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