Financial Crime World

EU Regulates High-Risk Third Countries in Fight Against Money Laundering

The European Union has taken a significant step to regulate high-risk third countries in its ongoing efforts to combat money laundering and terrorist financing. The new regulations aim to ensure that financial transactions are conducted in a safe and secure manner, while also preventing illegal activities.

What is a High-Risk Third Country?

A “high-risk third country” is defined as a country that has strategic shortcomings in its national system for combating money laundering and terrorist financing, or one that is categorized by obliged entities as high risk. This includes countries that have been designated by the Commission as posing important threats to the financial system of the European Union.

Obliged Entities: Banks, Insurance Companies, and More

Obliged entities, which include banks, insurance companies, and other financial institutions, are required to conduct thorough risk assessments and implement effective measures to prevent money laundering and terrorist financing. These entities must ensure that their customers and business partners are not involved in illegal activities.

What is a Proceed?

The regulations define “proceeds” as any economic advantage derived directly or indirectly from a criminal offense. This includes:

  • Any form of property, including subsequent reinvestment or transformation of direct proceeds
  • Any valuable benefits

Payment Service Providers: A New Category

Payment service providers are also covered by the regulations. These entities provide payment services within the meaning of section 2 of the Payment Services Law.

Monetary Value in Games of Chance

The regulations address the issue of monetary value in games of chance, including:

  • Lotteries
  • Casino games
  • Betting transactions

These activities are governed by a group of undertakings, which includes parent companies, subsidiaries, and entities in which they hold a participation.

Immovable Ownership or Property

The regulations define “immovable ownership or property” as having the same meaning as in the Immovable Property (Tenure, Registration, and Valuation) Law. This includes any form of written or oral information or documents, including information registered on a computer.

The legal framework for these regulations is established under Article 22 of Directive 2013/34/EU. A “group” is defined as a group of undertakings that consists of:

  • A parent undertaking
  • Its subsidiaries
  • Entities in which the parent undertaking or its subsidiaries hold a participation

Instrumentalities: Property Used for Criminal Activities

The regulations define “instrumentalities” as any property used or intended to be used, in any manner, wholly or in part, to commit a prescribed offense. This includes:

  • Any form of written or oral information or documents
  • Information registered on a computer

Consequences for Non-Compliance

Failure to comply with these regulations can result in severe consequences, including fines and penalties. The regulations are designed to ensure that financial transactions are conducted in a safe and secure manner, while also preventing illegal activities.

Overall, the EU’s new regulations aim to strengthen its fight against money laundering and terrorist financing by regulating high-risk third countries and imposing stricter requirements on obliged entities.