However, in the wake of the events in Paris last November, both the European Institutions and the governments of Member States agreed that further action was required to prevent the EU’s financial system from being used for money laundering and funding of terrorism.
At the beginning of February, the Commission published proposed measures, laid out in an ‘Action Plan to Strengthen the Fight against Terrorist Financing’, having two objectives, namely those aimed at:
- preventing the movement of funds and identifying terrorist funding and those aimed at:
- disrupting sources of revenue for terrorist organisations.
The key actions include:
- ensuring virtual currency exchange platforms are covered by the Anti-Money Laundering Directive;
- tackling terrorist financing through anonymous pre-paid instruments such as pre-paid cards;
- improving access to information and cooperation between EU Financial Intelligence Units;
- ensuring a high level of safeguards for financial flows from high risk third countries;
- giving EU Financial Intelligence Units access to centralised bank and payment account registers and central data retrieval systems;
- tackling terrorist financing sources such as the illicit trade in goods, cultural goods and wildlife;
- working with third countries to ensure a global response to tackling terrorist financing sources.
Moreover, the Commission has also laid out deadlines, spanning over this year (2016) as well as next year (2017), for the implementation of actions required to be taken.
To mention a few, the speeding up of concrete application of UN freezing measures by the EU, through enhanced information exchange and quicker implementation, as well as assisting third countries to help them comply with UN measures, are scheduled for immediate action.
The drawing up of an EU blacklist to identify high risk third countries with deficiencies in combating money laundering and terrorist financing is one of the actions scheduled for early 2016. Proposing new EU legislation to harmonise criminal sanctions for money laundering as well as legislation against illicit cash movements, including possible limits on cash or assets carried or transported across borders, are some of the actions scheduled for the second half of 2016.
Of particular importance is the bringing forward, to the second half of the 2016, the transposition of the 4th AMLD into national legislation. The EU Council has also, in a press release of the 12 February 2016, urged Member States to aim for implementing the 4th AMLD before the end of 2016. The Commission observed:
“The adoption of the Fourth Anti-Money Laundering Package in May 2015 represented a significant step in improving the effectiveness of the EU’s efforts to combat the laundering of money from criminal activities and to counter the financing of terrorist activities. It must now be implemented swiftly by Member States. The Commission is calling on Member States to commit to do this by the end of 2016. In December 2015, the Commission proposed a Directive on combatting terrorism which criminalises terrorist financing and the funding of recruitment, training and travel for terrorism purposes. The Commission is now proposing further ways to tackle the abuse of the financial system for terrorist financing purposes.”
A report on money laundering and terrorism financing with recommendations to Member States is on the agenda for the year 2017.
Suffice to note that, between the 17-19 February, the Financial Action Task Force (FATF) held a plenary session focusing on terrorist financing The main focus of this meeting was to “finalise a robust strategy to strengthen the global response to the current terrorist financing threat”.
The Commission explained that they will propose a number of targeted amendments to the Fourth Anti-Money Laundering Directive at the latest by the end of Q2 2016, in the following areas:
- Ensuring a high level of safeguards for financial flows from high risk third countries by including a list of all compulsory checks (due diligence measures) that financial institutions should carry out on financial flows from countries having strategic AML-CFT deficiencies;
- Enhancing the powers of EU FIU’s and facilitating their cooperation, and widening the scope of information accessible by the FIU’s;
- Introducing centralised national bank and payment account registers or central data retrieval systems in all Member States thereby giving FIU’s easier and faster access to information on the holders of bank and payment accounts;
- Tackling terrorist financing risks linked to virtual currencies by bringing virtual currency exchange platforms under the scope of the EU 4thAMLD, so that these platforms have to apply CDD controls when exchanging virtual for real currencies, ending the anonymity associated with such exchanges;
- Tackling risks linked to anonymous pre-paid instruments (e.g. pre-paid cards).
Other measures will include:
- Improving the efficiency of the EU’s transposition of UN asset freezing measures and improve the accessibility of UN listings to EU financial institutions by the end of 2016;
- Limiting risks linked to cash payments through a legislative proposal on illicit cash movements (e.g. cash shipped by freight or post) and allowing authorities to act upon lower amounts of cash where there are suspicions of illicit activity;
- Assessing additional measures to track terrorism financing through a complementary EU system for tracking terrorist financing, for example to cover intra-EU payments which are not captured by the EU-US Terrorism Financing Tracking Programme (TFTP):
- Disrupting the sources of revenue of terrorist organisations.
Linked to the above, the EU Commission also published (during Decemebr 2015) a proposal for a directive to specifically combat terrorist financing and replacing Council Framework Decision 2002/475/JHA on combating terrorism. The suggestion is that the directive be transposed within 12 months from adoption.