Furthermore, exchange and use of information and to the operational cooperation between FIUs to be followed up by legislative proposals, if appropriate.
The Union co-legislators agreed in December 2017 on a number of significant changes to the 4AMLD (5th Anti-Money Laundering Directive (5AMLD). They include the mandatory establishment of national centralised bank account registries or data retrieval systems in all Member States, to which Financial Intelligence Units (FIUs) and anti-money laundering authorities would have access to.
The 4AMLD and 5AMLD are based on an internal market legal basis and deal with preventive efforts to address money laundering, associated predicate offences and terrorist financing.
On 12th September 2018 the European Parliament adopted a legislative resolution on the proposal for a directive of the European Parliament and of the Council on countering money laundering by criminal law. The proposed Directive establishes minimum rules, concerning the definition of criminal offences and sanctions in the area of money laundering, complements and builds on the preventive side of the Money Laundering Directives and reinforces the legal framework from the point of view of police cooperation.
Furthermore, this proposal for a Directive reinforces and builds the Union criminal law framework with regard to the fight against serious offences and it is in line with policy aims pursued by the Union, and in particular the reformed data protection regime. The proposal also sets specific provisions regarding logging, records of information requests, restrictions to rights and processing of special categories of personal data (“sensitive data”).
The proposed initiative will provide competent authorities with access to mechanisms, which centralise personal data, relating to natural persons or from which personal data can be retrieved. This will have an impact on the fundamental rights of the data subjects. In particular, it will interfere with the right to privacy and the right to the protection of personal data. The interference will be relatively limited in terms of importance, as the accessible and searchable data does not cover financial transactions or the balance of the accounts. It will only cover a limited set of information (e.g. the owner’s name, date of birth, bank account number), which is strictly necessary to identify in which banks the subject of an investigation holds bank accounts.
This legislative initiative is also consistent with the aims of the Union’s internal market development, in particular the single market for payments establishing a safer and more innovative payment services across the EU, namely rules laid down in Directive (EU) 2015/2366.
The European Commission proposed these measures as they believe, that the existing measures are neither comprehensive nor coherent. In particular, the Commission suggests, that with national differences in the definition, scope and sanctioning of money laundering offences, cooperation between national police forces is sub-optimal. They further suggest, that criminals exploit these legislative discrepancies to launder criminal proceeds.
However, due to their constitutional agreements with the EU, 6AMLD will have no effect in Denmark, whilst the UK government may elect to opt out of 6AMLD, notwithstanding the Brexit transition agreement.
The most significant element of the 6AMLD is to provide a harmonised list of twenty-two predicate offences. Interestingly, environmental crimes fall within the scope of 6AMLD.
By explicitly defining all these predicate offences, the 6AMLD will necessarily impose greater obligations on firms. They will have to implement monitoring systems, to detect proceeds possibly linked to these offences. Sufficient staff and targeted training, as well as resources and up-to-date technological capacity, should be made available to the investigative services.
In providing for a common definition of money laundering throughout the EU, the Commission proposes that “self-laundering” falls within the scope of the offence.
Member States shall take the necessary measures to ensure, as appropriate, that their competent authorities freeze or confiscate the proceeds derived from and instrumentalities used or intended to be used in the commission or contribution to the commission of the offences.
Legal persons shall be held liable for any offence referred to in the Directive when committed for their benefit.
Included in the possible sanctions, is also a prohibition from public benefits or aid for four years, a temporary or permanent ban from conducting business, a compulsory winding-up of the organisation and a temporary or permanent closure of business units, through which the offences were committed.
The proposal also facilitates cooperation between FIUs and between FIUs and competent authorities. It defines what type of information (financial information, financial analysis, law enforcement information) can be requested by competent authorities and FIUs respectively, as well as the exhaustive list of criminal offences for which each authority can exchange information always on a case-by-case basis
The proposed measures will not bring any changes to the core functions or the organisational status of the FIUs, which will continue to perform the same functions, as set out in national and Union legislation already in force. The proposal facilitates the cooperation between FIUs, as well as cooperation between FIUs and competent authorities.
Tax crimes, covering both direct and indirect crimes are also in scope, where, according to national law, the minimum prison sentence is more than six months, or the maximum sentence is greater than twelve months for any tax offences.
The Commission also includes as a predicate offence, which is not explicitly identified in the FATF Recommendations.
In order to deter money laundering throughout the Union, Member States shall ensure, that it is punishable by a maximum term of imprisonment of at least four years. Member States shall also provide for additional sanctions or measures, such as fines, temporary or permanent exclusion from access to public funding, including tendering procedures, grants and concessions, temporary prohibition from engaging in commercial activity or temporary bans on running for elected office or public office.
Member States will have jurisdiction over offences committed within their territories by one of their nationals. Predicate offences committed in another Member State or third country, the offence must be illegal in both the home State and the other jurisdiction.
Where an offence falls within the jurisdiction of more than one Member State and where any of the Member States concerned, can validly prosecute based on the same facts, the Member States concerned shall cooperate in order to decide, which of them will prosecute the offender, with the aim of centralising proceedings in a single Member State.
As soon as the European Parliament and European Council have reached an agreement on the final text of the proposed 6AMLD, the Directive will be formally adopted and published in the Official Journal of the European Union. Thereafter, Member States will have to adopt and publish the laws, regulations and administrative provisions, necessary to comply with the Directive, at the latest 26 months after the date of its entry into force.
Krassi BozhilovaSenior Associate | Regulatory Compliance, AML
A.G. Paphitis & Co LLC