In our previous blog, on the EU 4th Money Laundering Directive it was noted that the European Commission had adopted proposals in the fight against money laundering, tax evasion and terrorist financing.
One of these proposals was a Directive on the prevention and use of the financial system for the purpose of money laundering and terrorist financing – the 4th AML Directive.
Brief Recap On 4th EU Money Laundering Directive
In brief, the 4th AML Directive takes into account the latest recommendations of the Financial Action Task Force (“FATF”). The purpose of the Directive is to remove any ambiguities in the previous legislation and improve consistency of anti-money laundering and counter terrorist financing rules across all EU Member States.
The Role Of The Financial Action Task Force
The FATF, the international anti-money laundering and anti-terrorist financing body, was established in 1989 by a G-7 Summit that was held in Paris in response to threats posed to the banking system and to financial institutions. The FATF currently comprises of 34 member jurisdictions and 2 regional organisations, representing most major financial centres in all parts of the globe.
In short, the FATF monitors the implementation of AML measures globally and highlights any shortcomings identified in each particular country.
Update On 4th EU Money Laundering Directive
The Directive remains to be finalised amongst the European Parliament, European Commission and the Council of Ministers. A full version of the Commission's proposal is available here.
The European Parliament continued to make changes to the Directive throughout the last year and of significance, on 11 March 2014, the European Parliament voted 643 to 30 in favour of a common position on the revision of the 4th Directive to include a requirement to create a public register of beneficial owners for AML purposes.
It remains to be seen however if this amendment, amongst others, will be made to the Directive before adoption. Whilst publicly available beneficial ownership registers for trusts remain mandatory under the European Parliament version of the Directive, it is interesting to note that there is no such requirement in any of the European Council versions of the Directive as of yet.
In September 2014, the new Parliament, which was elected in May 2014, began “trilogue” negotiations chaired by the Italian Presidency, on the proposed revised legislation with the European Commission and the Council of Ministers. These negotiations will determine the final Directive.
After the trilogue negotiations, there will be a full plenary vote of the European Parliament to enact the final version of the directive. This is expected to occur before the end of 2014.
Once the text has been finalised and adopted at a European level, the Directive must then be transposed into national legislation within a period of two years. Overall, the Directive is generally welcomed. It is a strong indication internationally that the EU is leading the global battle against money laundering and remedies any weaknesses in current EU AML laws.