European Commission puts forward Anti-Money Laundering Directives

On February 5, 2013 the European Commission put forward proposals aimed at money laundering and terrorist financing. The directives are meant to strengthen and clarify the existing EU rules and regulations and to close any legal loopholes which may be taken advantage of.

The Directives will improve the transparency of rules in regards to Customer Due Diligence in order for states and financial institutions to have necessary knowledge of customers and their businesses. The Directives will also strengthen the cooperation between national Financial Intelligence Units (FIUs) whose functions are to analyse financial information and report any suspicions of money laundering or terrorist financing to the proper authorities.

One specific proposal is to reduce the cash payment threshold from 15,000 Euro to 7,500 Euro. This means that all cash payments of 7,500 Euro or more will be brought within the scope of anti-money laundering laws. Such payments will require due diligence, record maintenance, internal controls and filing of suspicious transaction reports. Another proposal is for casinos to do checks on transactions of 2,000 Euro or more.

The proposed directives set sanctions of up to 5 million Euro for individuals and up to 10% of turnover for firms, should they be found breaking the anti-money laundering rules. Other sanctions include banning of executives from board seats, public naming and the withdrawal of licenses from banking institutions.

According to Internal Market and Services Commissioner Michel Barnier: “The Union is at the forefront of international efforts to combat laundering. In addition to the criminal law approach, a preventive effort via the financial system can help to stop money-laundering. Our aim is to propose clear rules that reinforce the vigilance by banks, lawyers accountants and all other professionals concerned.”

Source: www.out-law.com.