Financial Crime World

Data Protection Concerns Raised as EU Looks to Strengthen Anti-Money Laundering Measures

Brussels - The European Union’s Efforts to Combat Money Laundering and Terror Financing

The European Union is set to introduce new measures to strengthen its anti-money laundering (AML) and countering the financing of terrorism (CFT) efforts. However, these efforts have raised concerns about data protection and confidentiality.

A Single Rulebook for AML/CFT

The European Commission plans to table legislative proposals in Q1 2021 to create a single rulebook for AML/CFT across the EU. The proposal is based on an impact assessment that highlights the importance of effective supervision in preventing money laundering and terrorist financing. However, experts warn that the process may compromise individuals’ privacy and personal data.

Data Protection Concerns

The free flow of personal data between authorities is essential for effective supervision, but it also raises significant concerns about data privacy and confidentiality. The European Data Protection Supervisor (EDPS) has called on the Commission to ensure that any new legislation includes robust data protection safeguards to prevent unauthorized access or disclosure of personal data.

Consequences of Poor Supervision

Experts warn that poor supervision in the EU’s AML/CFT framework could have serious consequences, including:

  • Failings in one national competent authority creating risks for the whole of the Single Market
  • Loss of trust among citizens and the wider international community
  • Increased risk of money laundering and terrorist financing

Need for Effective Supervision

The European Commission has acknowledged that there is a clear need for an integrated AML/CFT supervisory system at the EU level to ensure consistent high-quality application of the AML/CFT rulebook throughout the EU. High-quality supervision is imperative for restoring trust among citizens and the wider international community.

Recommendations

Experts are urging policymakers to prioritize data protection and confidentiality in their efforts to strengthen the EU’s AML/CFT framework. This includes:

  • Ensuring robust data protection safeguards in any new legislation
  • Implementing effective supervision to prevent money laundering and terrorist financing
  • Promoting cooperation between all relevant competent authorities to ensure a consistent application of the AML/CFT rulebook

By prioritizing data protection and confidentiality, policymakers can create a stronger and more effective AML/CFT framework that protects individuals’ privacy while preventing money laundering and terrorist financing.