Money Laundering and Terrorist Financing –

Challenges from a European Perspective

Public hearing on tax and financial havens21 March 2012

Structure

•What is Money Laundering and Terrorist Financing?•Policy response•What next?

Money Laundering/Terrorist Financing

• ML: The conversion of the proceeds of illicit activity into apparently “clean” assets.

• TF: The financing of: - terrorist acts - terrorists - terrorist organisations

How Does Money Laundering Work? – The Theory

Placement

Layering

Integration

The Policy Response

• FATF• UE

• Policy-making body• FATF standards• Mutual evaluations

FATF

EU Directive 2005/60/EC

Main features:

• Prohibits money laundering and terrorist financing• Imposes customer due diligence and reporting obligations

to financial and some non financial businesses and professions

• Obliges Member States to establish a Financial Intelligence Unit

• Protection of employees against threats or hostile actions• No tipping-off• Record keeping (5 years after end of relationship for CDD)• CDD and record keeping to be applied to branches and

subsidiaries outside the EU• Compulsory supervision

Directive 2005/60/EC

The directive has been transposed in all EEA countries

It is only one element in a broader legal framework which also comprises:- Regulation 1781/2006 on payer information

accompanying transfers of funds - EU legal instruments on freezing of assets- Council Decision 2000/642 on FIUs cooperation

etc.- Commission Directive of 1 August 2006

Revision of the Directive 2005/60/EC

• Evolution, not revolution• AMLD regimes basically work – but

modifications necessary in light of new technologies, market changes and new threats.

• EU legislation must be adapted to new international standards

• Proposal of Directive: October 2012

Conclusion

• What next?• Towards the Fourth AMLD• FATF 4th Round• Developing effectiveness

assessment• Reacting to new threats

Tentative timing for revision of framework

2012

15 February

Adoption of new FATF standards

April Adoption of Commission Report

June Close public consultation

End October 2012

Adoption of an EU proposal to revise the 3rd AMLD

23 November

Possible public hearing to present main lines of planned changes

2013 2nd semester

Finalise negotiations (co-decision procedure)

Final quarter

Start of FATF evaluation process

Thank you for your attention