The European Union’s Plan to Tackle Money Laundering

Nicola Sharp

Nicola Sharp

It now appears that the European Union (EU) is convinced of the need for a central authority to tackle the scourge of money laundering. Here, Nicola Sharp explains why the EU’s new proposals for investigating this form of criminality cannot come soon enough.

EU finance ministers are set to authorise the European Commission to draft plans for an enforcement body that would be independent and would have what have been termed direct powers to oversee the anti-money laundering efforts in all EU Member States. If and when it comes into existence, that body will be authorised to police, among other things, financial institutions’ compliance with EU rules regarding anti-money laundering due diligence.

The move comes at a time when the issue of money laundering has gained increased prominence, due largely to Transparency International’s report entitled ‘At Your Service’ which painted a fairly alarming picture of the extent to which laundered money has seeped into many, if not all, aspects of UK life.

The EU, it seems, has at least recognised that more needs to be done. The way loopholes have been exploited by those looking to launder money in Europe, the damage this does to the reputation of the financial system and the potential effect on EU Member States’ economies have all been noted by the EU.

It may be unfair to class it as a wake-up call. The EU has been aware of the problem of money laundering and has been taking steps to tackle it for years, but now the EU at least seems to recognise that more needs to be done – and that anti-money laundering efforts need to be more co-ordinated than has been the case to date.

What’s the roadmap?

At this stage, we’re short of precise details. Some EU Member States want an all-new body to take on the role. Others believe the task could be given to the European Banking Authority (EBA) – even though some in the EU are far from happy with the EBA’s track record. Affording Europol new authorities has also been floated as a possible way forward.

EU officials have said that any final and agreed plan could be introduced as regulations that apply directly to financial institutions as opposed to legislation, which would need Member States to adopt complementary national laws such that regulations could be enforced in each state.

While the proposal at this stage lacks clarity, the need for something to be done is crystal clear. The EU has made repeated attempts to tackle money laundering and the results so far can be described as mixed at best.

The Fourth Money Laundering Directive (4MLD) was introduced by the EU as a genuine and well-intentioned way to address the problem, and yet it was less than a year-and-a-half ago that the European Commission’s Justice Commissioner Vera Jourova was berating 20 European Union Member States for the slow and unsatisfactory transposition of 4MLD into their national laws.

The fact that the Justice Commissioner was openly criticising more than 70% of EU Member States for failing to meet their obligations regarding 4MLD is perhaps the starkest reminder that Europe has a problem. More than a year after the deadline for implementing 4MLD, a mere handful of Member States had transposed it into national law. Now we have the Fifth Money Laundering Directive. Every EU Member State should be ready to implement this by January 20 next year, but only a supreme optimist would believe that this is likely to be so.

Serving a purpose

The directives have served a purpose. They’ve also shown that the EU is far from ignorant regarding money laundering. Ultimately, though, they have illustrated the core of the problem. The EU has, until now, put its faith in a decentralised collection of national authorities to tackle an international issue that demands a concerted, co-ordinated and consistent approach.

We may not yet know the exact details of how the EU intends to create one body to take on the huge problem of money laundering, but what we do already know is that such action cannot come soon enough.

Nicola Sharp is Legal Director at Rahman Ravelli

*For an in-depth guide on money laundering visit the Rahman Ravelli website

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014 and as Editor of The Paper (Pro-Activ Publications' dedicated business newspaper for security professionals) in September 2015. Brian was appointed Editor of Risk Xtra at Pro-Activ Publications in May 2018.

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