Current and future European Commission

AML/CFT activities

Henny Bakker

Coordinator FIU-NL Team Counter Terrorism &

Proliferation Financing Financial Intelligence Unit-

The Netherlands

SUBJECTS

• AML/CFT and Proliferation Financing (PF)

• New EU Payment systems

AML

• Third EU AML/CFT Directive

• FIU Platform

• Trends EU regulators

THIRD EU AML/CFT DIRECTIVE

• Identification high risk transactions and UBOs

• Extra attention on PEPs

• Detailed Customer Due Diligence

• Introducing traders in goods as reporting

entities (threshold cash payments EUR

15.000)

EGMONT annual report 2010: EUROPE REGION

The third European Union AML-CFT directive is an important change for European countries, as it

brings European legislation up to date with international requirements. In the revision of

transposition of the 3rd European Union AML-CFT directive by the European Commission in

January 2010, only two (2) countries had not implemented the directive, while two (2) others have

done it partially.

FIU PLATFORM

• Informal group set up by the EU Commission

• Facilitate cooperation and exchange

information among FIUs EU Member States

• Identify problems and good practices in

framework of the implementation of the third

EU AML/CFT Directive

• EU Services participate and support Platform

TRENDS EU REGULATORS

• Euro crisis show difficulties for National

Banks to oversee the total picture (Iceland)

• Banks operate in different jurisdictions

• EU regulations create Single European

Payment Area (SEPA)

• Regulators can only act nationally

CFT

Counter Terrorism

– Terrorist Finance Tracking Program (TFTP)

– Terrorist Finance Tracking System (TFTS)

– Proliferation Financing

TERRORIST FINANCE TRACKING SYSTEM

(TFTS)

• EU-US agreement

• US demands bulk data with nexus to terrorism

• Nexus to terrorism checked by Europol

• OK Europol SWIFT sends data to US

• EU member states can make a request to US

• US sends “leads” via Europol to EU member

state

• US can share “leads” spontaneously

http://ec.europa.eu/commission_2010-014/malmstrom/archive/TFTP%20II%20Draft%20Agreement%2011%20June%20initialled.pdf

http://www.treasury.gov/resource-center/terrorist-illicit-finance/Terrorist-Finance-racking/Documents/Final%20Updated%20TFTP%20Brochure%20(8-5-11).pdf

• European Union Commission proposal

• SWIFT data in EU database

• Request with nexus to terrorism from US to TFTS data

• “Leads” found disseminated to the US

• Accessible to all EU Member States

http://www.europolitics.info/commission-mulls-options-for-eu-tfts-art309909-40.html

TERRORIST FINANCE TRACKING PROGRAM

(TFTP)

PROLIFERATION FINANCING (PF)

COUNCIL REGULATION (EC) No 1110/2008 (10-

11-2008) amending Regulation (EC) No 423/2007

concerning restrictive measures against Iran

• Appointing FIUs as central point of

information

• Reporting obligation of transactions with risk

for PF

• Reporting transactions of named Iranian bank

• Difficult subject for banks

• Need for expertise

• Support from FATF PF report

FATF rapport Proliferatie Financiering, http://www.fatf-gafi.org/dataoecd/32/40/45049911.pdf

Add info: http://www.exportcontrol.org/library/conferences/2706/02_Day_1-Plenary-Afternoon2-Walker.pdf

PROLIFERATION FINANCING (PF)

NEW EU PAYMENT SYSTEMS

One European payment area

• Single European Payment Area (SEPA)

• Payment Service Directive (PSD)

SINGLE EUROPEAN PAYMENT AREA (SEPA)

• Cross-border retail payments

• Self-regulatory initiative by banking sector

(represented in the European Payment

Council (EPC))

SEPA not free of costs, European Parliament

mandated that banks may only charge the

same amount as for domestic transfers

• Standardization of euro payments: equal time limits, equal fraud-risk levels, equal processes, all-electronic straight through processing, no differences between national and international payments in the SEPA area; strengthening trust and reliability on a pan-European basis.

• Competition in respect to higher number of competitors, fewer niches or special fields or incompatibilities through standardization.

• Reduction of costs of electronic money and of payment transactions through competition at the side of payment providers and banks – both are considered as the biggest losers of the SEPA standardization process at an estimated € 40,000,000,000 per year.

• Reduction of cash money and increase of electronic money through reduction of costs of electronic money.

• Increasing surveillance of (electronic) money flow particularly regarding money laundering (unofficially also for surveillance of illicit work [10–30% of GDP's], organized crime and taxes).

SINGLE EUROPEAN PAYMENT AREA (SEPA)

OBJECTIVES

SEPA CONSISTS OF 32 COUNTRIES:

• the 17 members of European Economic Area(EEA) and EU that are in the Eurozone

• the 10 members of EEA and EU that are not in the Eurozone,

• the 3 members of the EEA that are not in the EU: Liechtenstein, Iceland and Norway is not part of the EEA)

• 1 non EU country that uses the Euro by agreement with the EU, but is not officially part of the Eurozone: Monaco

• Switzerland

Including the following territories that are considered to be part of the EU in accordance with Article 299 of the Treaty of Rome:

Martinique, Guadeloupe, French Guiana, Réunion Gibraltar, Azores, Madeira, Canary Islands, Ceuta and Melilla and Åland Islands

• For credit transfers: SCT–SEPA Credit

Transfer

• For direct debits: SDD–SEPA Direct Debit.

(Banks 2009)

• For credit cards: SEPA Cards Framework

• Since 1/2008 banks are migrating customers

2011 SEPA payments will replace all national

payments in the Eurozone

Info: http://ec.europa.eu/internal_market/payments/sepa/

SINGLE EUROPEAN PAYMENT AREA (SEPA)

PAYMENT SERVICE DIRECTIVE (PSD)

• Level playing field by harmonizing customer

protection and the rights/obligations for

payment providers

• Payment service providers (Non banking

institutions like money transfer remitters)

Info: http://ec.europa.eu/internal_market/payments/framework/index_en.htm

PSD CONCERNS

• API registered EU member state A can open

offices in all other EU member states

• Need for leveling regulation and supervision

• Remitters register in EU member state with

the lowest grade of regulation

• Regulator in EU member state B can not take

measures against PSD office, API is

registered in EU member state A.

• Regulator in EU member state A has to take

regulative actions against office in EU

member state B.

CONTACT

Henny Bakker

FIU-The Netherlands

Tel: +31 79 3459391

Mob: +31 650680249

Email: henny.bakker@klpd.politie.nl