Money Laundering and Terrorist Financing – Challenges from a European Perspective Public hearing on tax and financial havens 21 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 4 th Round Developing effectiveness assessment Reacting to new threats

Tentative timing for revision of framework FebruaryAdoption of new FATF standards AprilAdoption of Commission Report JuneClose 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 nd semesterFinalise negotiations (co-decision procedure) Final quarterStart of FATF evaluation process

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