This week, members of the European Parliament’s committees on Economic and Monetary Affairs (ECON) and on Civil Liberties, Justice and Home Affairs (LIBE) have tabled their amendments for the review of the EU’s rules to fight money laundering and counter terrorist financing.
In response to the terrorist attacks in Paris and Brussels as well as to the Panama Papers revelations, the European Commission presented in July its legislative proposals to amend the existing EU Anti-Money Laundering Directive (AMLD). The new rules will be negotiated and adopted by the European Parliament and the Council of Ministers as co-legislators.
This week’s meeting of European finance ministers (ECOFIN) has brought a general agreement among Member States on the file. In the upcoming weeks, the European Parliament will agree on a report which will serve the European Parliament’s negotiating team as mandate in the upcoming trilogue negotiations with the Commission and the Council.
As Green ECON shadow rapporteur and together with my Green colleague and co-rapporteur for the LIBE committee Judith Sargentini, we have amended the Commission proposal to address shortcomings with regard to enforcement of rules, coordination among Member States and transparency on beneficial ownership. We are very pleased, that the co-rapporteur of ECON Krišjānis Kariņš (EPP) has accepted a lot of our proposals so that they were co-tabled with Judith Sargentini.
Firstly, it is of utmost importance to ensure proper enforcement of existing rules. Therefore, we empower the Commission to carry out audits of competent authorities and make recommendations to the Member States if shortcomings are discovered (new Article 48a). We foresee consequences, if a Member State does not comply with the recommendations of the Commission on deficiencies in addressing money laundering risk (amendments to Articles 6 (4) and 7 (5a)). We also make tax offences a predicate offence of money laundering irrespective of the definition in Member States (amendments to Articles 3 (4) and 57).
Secondly, it is crucial to improve coordination among competent authorities. Therefore, we propose to establish a European Financial Intelligence Unit (FIU), which shall improve coordination and information exchange among national FIUs (amendment to Article 51). Likewise, we ensure that not only financial intelligence units (FIUs), but also tax authorities and law enforcement bodies can cooperate and exchange information (amendment to Article 49). We ensure cooperation and information exchange among competent authorities supervising credit and financial institutions and empower the European Supervisory Authorities ESAs to issue guidelines in this regard (amendments to Articles 50, 50a and new Articles 57a, 57b).
Thirdly, beyond cooperation and enforcement, transparency is key to address money laundering risks. Therefore, we ensure full public disclosure of beneficial ownership information on companies and trusts (amendments to Articles 30 (5a) and 31). Likewise, we include all kinds of trusts into the obligation to provide beneficial ownership information (amendment to Article 31 (1)). We introduce registers for beneficial ownership information on real estate property and on life insurance contracts, which are often abused for money-laundering purposes (new Articles 32b and 32c). Finally, we improve the criteria for defining high-risk third countries (“blacklist”) in order to cover more jurisdictions which require enhanced customer due diligence measures (amendment to Article 9 (2)).
Please find a compilation of our Green amendments below:
The European Parliament’s draft report already containing several Green ideas can be found here:
The amendments tabled together with my Green colleague Judith Sargentini and by myself can be found here:
In order to facilitate the reading of the amendments, you can find a consolidated version of the text here:
Therein you can find in track changes the amendments proposed by the Commission. Highlighted in yellow are the changes introduced by the co-rapporteurs’ draft report. Highlighted in green are the amendments jointly tabled by Judith Sargentini and myself. Highlighted in red are the amendments tabled by myself only. Highlighted in blue are the amendments tabled by Judith Sargentini only.
Compilation of Green amendments to the Anti-Money Laundering Directive
Enlarge scope of obliged entities by including letting agents, trading in services, electronic money issuers and distributors, art galleries and auction houses (Art. 2)
Make tax offences a predicate offence of money laundering irrespective of the definition in Member States (Art. 3 (4) and Art. 57)
Lower threshold for identifying beneficial owners (from 25% down to 10%) and obligation to record no beneficial ownership in case of doubt (Art. 3 (6))
Foresee consequences if a Member State doesn’t comply with the recommendations of the Commission on deficiencies in addressing money laundering risk (Art. 6 (4) and Art. 7 (5a))
Ensure proper coordination within Member States if competent authorities exist on regional or local level (Art. 6 (2))
Improve the criteria for defining high-risk third countries (“blacklist”) in order to cover more jurisdictions (Art. 9 (2))
Adjust threshold for identification of customers of prepaid cards used online to the ones used offline (Art. 12 (2))
Set a clear deadline by which obliged entities have to contact the customer for the purpose of reviewing information on beneficial ownership (Art. 14 (5))
Make optional customer due diligence measures compulsory for transactions with high-risk third countries (Art. 18a (1a))
Prohibit obliged entities from relying on third parties established in high-risk third countries without any exemptions (Art. 26 (2))
Ensure full public disclosure of beneficial ownership information on companies and trusts (Art. 30 (5a) and Art. 31 )
Require senior managers and shareholders to disclose whether they hold the position on behalf of another person (Art. 30 (1))
Require obliged entities to collect proof of registration when entering into a new customer relationship (Art. 30 (8))
Limit the possibility of Member States to allow exemptions from the obligation to provide beneficial ownership information (Art. 30 (9) and Art. 31 (7a))
Include all kinds of trusts into the obligation to provide beneficial ownership information (Art. 31 (1))
Ask Member States to assess legal arrangements having a structure similar to trusts and ask Commission to enact countermeasures if needed (Art. 31 (1) and (10a))
Introduce registers for beneficial ownership information on real estate property and on life insurance contracts which are often abused for money-laundering purposes (Art. 32b and Art. 32c)
Prohibit notaries, other independent legal professionals, auditors, external accountants and tax advisors from hiding behind client secrecy in the case of tax evasion, tax avoidance and tax fraud (Art. 34 (2))
Improve protection of whistleblowers reporting suspicious transactions (Art. 38, Art. 61)
Require competent authorities to also monitor persons to whom AML/CFT related tasks are delegated by obliged entities and self-regulatory bodies (Art. 48 (1))
Require competent authorities to carry out internal audits to ensure compliance with the directive (Art. 48 (2))
Empower the Commission to carry out audits of competent authorities 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 and law enforcement bodies can cooperate and exchange information (Art. 49)
Ensure cooperation and information exchange among competent authorities supervising credit and financial institutions and empower the European Supervisory Authorities ESAs to issue guidelines in this regard (Art. 50, Art. 50a, Art. 57a, Art. 57b)
Establish a European Financial Intelligence Unit to improve coordination and information exchange among national FIUs (Art. 51)
Require Member States to ensure that also law enforcement authorities are properly informed about breaches of the directive (Art. 58 (2))
Require sanctions for wrong beneficial ownership information (Art. 59)
Ask the Commission to report on the need to improve cooperation between asset recovery offices of the Member States (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)
Ask the Commission to assess the size of a maximum threshold of cash transfers (Art 65)