The European Parliament’s committees on Economic & Monetary Affairs (ECON) and Civil Liberties Justice & Home Affairs (LIBE) voted on the revision of the Anti-Money Laundering Directive on the 28th of February. The report was guided through Parliament by the Dutch Green co-rapporteur Judith Sargentini together with the EPP’s Krišjānis Karins. The majority of MEPs agreed to many demands from the Greens/EFA Group. The final text received an overwhelming majority in the Committees and is now the mandate of the Parliament for the decisive negotiation with the Council of member states which will start on 21 March.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“The European Parliament demands a tough line against financial crime. The Parliaments draws strong conclusions from the Panama Papers scandal. European anti-money laundering legislation has to be strengthened and properly enforced. We call on the member states to show the same strength and take on financial crime. Corruption, terrorism, tax evasion, wildlife trade, drugs and human trafficing can be fought by going after dirty money.
A public register for companies and trusts sheds light on complex company structures and shelf companies abused to hide illegal earnings. The Council wants to restrict the access to the register to people with a legitimate interest. This is bureaucratic, intransparent and will make the quality of the data worse if the register is not publically accessible.
In so many of the tax dodging scandals of recent years, poor enforcement has been as much of a problem as poor legislation. Therefore, we hope that our Green proposal to grant the European Commission the power to audit Member States‘ relevant authorities will be preserved in the trialogues. We need to make sure that Member States are enforcing the rules.
We will try hard to convince Member States to agree on our Green proposal to make beneficial ownership information transparent in real estate registers. Criminal money is often invested in real estate. Therefore, it is crucial for financial intelligence units (FIUs) and law enforcement bodies to know who benefits from these assets.
Finally, we will fight for an improvement of the criteria defining high-risk third countries in order to cover more jurisdictions. When establishing this blacklist, the Commission has to carry out its own evaluation of the real money laundering risks posed by third countries.”
You can download the final AMLD position of the European Parliament here:
Summary of the AMLD mandate of the European Parliament for the negotiations with the Member States
Public access to beneficial ownership register for companies and trusts
Ensure public access to beneficial ownership information on companies and trusts without any restrictions (Art. 30 and Art. 31)
Create a European register for beneficial ownership information on companies and trusts based on national registers (Art. 30 (10) and Art. 31 (9), Commission proposal)
Lower threshold for identifying beneficial owners (from 25% down to 10%) (Art. 3 (6))
Obligation to terminate the business relationship if no beneficial owner can be identified (Art. 13 (6a new))
Include all kinds of trusts into the obligation to provide beneficial ownership information (Art. 31 (1))
Require Member States to define characteristics of legal arrangements similar to trusts and call on the Commission to come forward, if necessary, with a proposal by June 2020 to include also these legal arrangements in the obligation of providing information on beneficial ownership (Art. 31)
Make the registration in the EU of companies and trusts as a factor for simplified due diligence measures by obliged entities so as to give an incentive to companies and trusts to register within the EU (Annex II)
Require shareholders and senior managing official(s) to disclose whether they are holding the position in their own name or on behalf of another natural person (Art. 30 (1))
Require beneficial ownership information on trusts from settlers, trustees, protectors, beneficiaries and any other natural person exercising ultimate control over the trust (Art. 31 (1))
Require obliged entities under the AMLD to collect proof of registration from customers that are companies or trusts (Art. 30 and Art. 31)
Limit the possibility of Member States to allow exemptions from the obligation to provide information on beneficial owners exposed to the risk of fraud, kidnapping, blackmail, violence or intimidation under the condition of a detailed evaluation accessible to the Commission (Art. 30 (9) and Art. 31 (7a))
Require beneficial ownership information on companies incorporated outside the EU if they carry out activities inside the EU (Art. 30 (10))
Beneficial ownership registers for bank accounts, real estate property (land and buildings) and life insurance contracts
Set up national beneficial ownership registers for real estate property (land and buildings) (Art. 32b)
Set up national beneficial ownership registers for life insurance contracts (Art. 32c)
Set up national beneficial ownership registers not only for bank accounts (Commission proposal) but also for financial instruments regulated under MiFID and for safe deposit boxes (Art. 32a)
Require Commission to submit by June 2019 a report on the interconnection of national beneficial ownership registers for bank accounts, real estate property and life insurance contracts (Art. 32a, 32b, 32c)
Be tougher on tax crimes and intermediaries helping tax dodgers
Make tax offences a predicate offence of money laundering irrespective of the definition in Member States (Art. 3 (4) and Art. 57)
Require notaries, other independent legal professionals, auditors, external accountants and tax advisors to keep records of their actions in order to better control these middlemen who make money laundering crimes possible (Art. 34)
Strengthen oversight over obliged entities and enforcement of the AMLD in Member States
Require national competent authorities to also monitor persons to whom customer due diligence measures and other tasks related with anti-money laundering or combating terrorism financing are delegated by obliged entities and self-regulatory bodies (Art. 48 (1))
Introduce one structurally independent national competent authority which supervises and coordinates anti-money laundering activities carried out by other national competent authorities, self-regulatory bodies and law enforcement bodies to ensure that all obliged entities are subject to adequate supervision (Art. 48 (1))
Empower the Commission to carry out audits of competent authorities verifying their functioning and organisation and checking Member States’ compliance with recommendations for addressing money laundering risks identified by the Commission. Empower the Commission to report on its findings and make recommendations to the Member States if shortcomings are discovered (Art. 48a)
Ensure that not only financial intelligence units (FIUs) but also tax authorities (Commission proposal) and law enforcement bodies can cooperate and exchange information related to money laundering and terrorism financing within one Member State (Art. 49)
Require Member states to ensure that the competent authorities have adequate powers and adequate financial, human and technical resources to perform their functions (Art. 7b (5a new) of the Company Law Directive)
Strengthen cross-border information exchange and cooperation
Ensure cooperation and information exchange among competent authorities supervising credit and financial institutions (Art. 50a, Art. 57a, Art. 57b)
Empower the European Supervisory Authorities (ESAs) to issue guidelines on the modalities of cooperation and information exchange between competent authorities (Art. 50)
Ask the Commission to present a proposal to establish a European Financial Intelligence Unit to improve coordination and information exchange among national FIUs (Art. 51a and Art. 55)
Ensure that national FIUs can cooperate and exchange information with their foreign counterparts without restrictions and that a FIU from one Member State is able to make inquiries on behalf of a FIU from another Member State (Art. 51b and Art. 54)
Require national FIUs to publish annually summary statistics on collaboration and exchange of information with other FIUs (Art. 53)
Require the Commission to report every two years on barriers experienced by competent authorities regarding the exchange of information and the assistance between authorities of different Member States (Art. 53)
Urge Member States to cooperate and exchange information with third countries (Art. 57c)
Require Member States to ensure that law enforcement authorities are properly informed about breaches of the directive (Art. 58 (2))
Require competent authorities and self-regulatory bodies to inform the Commission when national laws hamper their supervisory and investigatory powers (Art. 58 (4))
Ask the Commission to report and if necessary enact legislation on the need to improve cooperation between asset recovery offices of the Member States and with respect to cash payments (Art 65)
Ask the Commission to assess obstacles in cooperation among national FIUs and to put forward proposals to improve national FIUs’ access to, exchange of and use of information (Art 65)
Strengthen criteria for the EU blacklist of high-risk third countries and require the Commission to carry out a proper evaluation
Improve the criteria for defining high-risk third countries (“blacklist”) in order to cover more jurisdictions, request the Commission to check deficiencies not only in law but also in actual administrative and commercial practice and to conduct its own assessment (Art. 9 (2) and (4))
Call on the Commission and Member States to take into account anti-money laundering provisions when negotiating trade agreements (Art. 9 (2a new))
Improve protection of whistleblowers reporting suspicious transactions and enable them to file a complaint in a safe manner
“Member States shall ensure that individuals, including employees and representatives of the obliged entity who report suspicions of money laundering or terrorist financing internally, externally or to the FIU, are legally protected from being exposed to threats, retaliatory or hostile action, and in particular from adverse or discriminatory employment actions, civil claims and criminal charges linked to such disclosure.” (Art. 38 (1))
“Member States shall ensure that individuals who are exposed to threats, hostile actions, or adverse or discriminatory employment actions for reporting suspicions of money laundering or terrorist financing internally or to the FIU are able to present a complaint in a safe manner to the respective competent authorities. Member States shall ensure that competent authorities have the legal duty to carry out an investigation and emit a decision. Judicial redress against the decision shall always be possible.” (Art. 38 (1a))
“The competent authorities shall provide one or more secure communication channel for persons to report suspicions of money laundering or terrorist financing. Such channels shall ensure that the identity of persons providing information is known only to the competent authorities.” (Art. 61)
Foresee tougher sanctions for non-compliance with AMLD obligations
Require sanctions not only for breaches that fulfil the following criteria all together: serious, repeated, systematic, or a combination thereof (Art. 59)
Require sanctions for wrong beneficial ownership information (Art. 59)
Strengthen assessment of money laundering risks and improve availability of data
Ensure proper coordination within Member States if competent authorities exist on a regional or local level (Art. 6 (2))
Disclose the Commission report and a summary of the Member States’ reports on anti-money laundering risks and extend their reporting obligations (Art. 6 and Art. 7)
Foresee consequences if a Member State does not comply with the recommendations of the Commission on deficiencies in addressing money laundering risk (Art. 6 (4) and Art. 7 (5a))
Require self-regulatory bodies designated by Member States to annually publish statistics on sanctions applied, suspicious transactions reports filed and breaches of the directive received (Art. 34)
Require Eurostat to publish an annual report summarising statistics of Member States on money laundering risks (Art. 44)
Strengthen customer due diligence measures carried out by obliged entities
Enlarge scope of customer due diligence measures from goods to services and define sensitive goods with regard to money laundering (Art. 11)
Require obliged entities to apply customer due diligence measures to existing customers not only regularly on a risk-sensitive basis but also compulsory no later than one year after the date of entry into force of this Directive (Art. 14 (5))
Require obliged entities to apply enhanced customer due diligence measures for transactions which fulfil one or more of the following conditions: they are complex, unusually large, conducted in an unusual pattern or lacking an entirely lawful purpose. Before, enhanced customer due diligence measures had only to be applied to transactions that fulfil all of the conditions named (Art. 18 (2))
Make some optional customer due diligence measures compulsory for transactions with high-risk third countries (Art. 18a (1a))
Ask Member States and the Commission to assemble a list of politically exposed persons resident in the Union which obliged entities can use when identifying their customers (Art. 20a new) and extend the status of politically exposed persons from 12 to 36 months after leaving office (Art. 22)
Prohibit obliged entities established in the Union from delegating customer due diligence measures and record-keeping requirements to third parties established in high-risk third countries without any exemptions for branches or subsidiaries (Art. 26 (2))
Lower the threshold for electronic money from EUR 250 to 150 but increase the threshold for anonymous online prepaid cards from EUR 50 (Commission proposal) to 150 (Art. 12)
Include more actors in anti-money laundering
Enlarge scope of obliged entities by including letting agents, trading in services, electronic money issuers and distributors, art galleries, auction houses and freeports (Art. 2)
Make it harder to sell residence or citizenship to criminals
Require national authorities to perform customer due diligence measures on applicants for residence rights or citizenship if the Member State grants these rights in exchange of capital transfers, purchase of property or government bonds, or investment in corporate entities in that Member State (Article 5a new)