What has happened?
The Presidency of the Council of the EU has issued a note which sets the agenda for the ECOFIN EU Council meeting later on this week, observing that Member States need to consider the scope of possible future actions on anti-money laundering and combating the financing of terrorism (AML/CFT).
What does this mean?
The fight against money laundering and terrorist financing is a high priority for the EU and the relevant legal framework has been substantially enhanced in the last few years.
Examples include the fifth Anti-Money Laundering Directive, the fifth Capital Requirements Directive and the review of the Regulations establishing the European Supervisory Authorities, which will be implemented in 2020.
Further, in July 2019, the EU Commission published a 'post-mortem' report of recent alleged money laundering cases involving EU credit institutions.
The report provides an overview of current issues likely to continue impeding the effectiveness of the EU AML/CFT framework, such as differences in the nature/amount/use of sanctions across the EU; unclear supervisory responsibilities of cross-border activities; and divergent tasks, competences and powers of the various authorities in charge of AML/CFT.
A way forward
In its note, "Way forward with a view to strategic priorities on Anti-Money Laundering and Countering the Financing of Terrorism", the Presidency observed that Member States need to consider the scope of possible future actions on AML/CFT, and has therefore noted that the following issues should be discussed at the EU Council meeting:
- What would be the most appropriate scope of further reforms? Would this be only for the financial sector/some sub-sectors (e.g. banks, investment firms, payment institutions, insurers)? Is a separate AML/CFT approach necessary for the non-financial sector?
- How should the ineffectiveness of the current AML/CFT framework stemming from the wide differences in national implementation be addressed? Which AML/CFT aspects would most benefit from further harmonisation through a Regulation?
- How should issues related to inadequate supervision be addressed? Is the creation of a new EU body a valid way forward, or is any existing body the best option? Which tasks could be envisaged for such a body, and what would be the appropriate governance model?
- How could effective co-operation be ensured between the relevant authorities and bodies involved in AML/CFT? Could issues related to cooperation with and between FIUs be addressed through the creation of a coordination and support mechanism?
What happens now?
This AML/CFT agenda will be discussed at the ECOFIN EU Council meeting on 10 October 2019.
Such discussions will aim to inform EU Council Conclusions on AML/CFT, which will be adopted on 5 December 2019 and will shape the future of the EU new AML/CFT legislative regime.
Please contact us if you would like to know more about this development or if we can help your organisation navigate the complex world of regulatory sanctions.
Authored by Aline Doussin and Imogen Brooks