Financial Crime World

Strengthening the EU’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Framework

The European Commission’s Action Plan on AML/CFT aims to address regulatory fragmentation, promote effective enforcement, and strengthen the EU’s AML/CFT framework. The plan proposes several key measures to achieve these goals.

Proposed Measures

The Commission’s plan includes the following proposals:

Enhanced Supervision

  • Establishing an integrated AML/CFT supervisor at EU level with direct powers over certain designated entities.
  • Extending the European Banking Authority’s (EBA) role or establishing a new entity dedicated to AML/CFT supervision across all economic sectors.

Improved Cooperation and Intelligence Sharing

  • Enhancing cooperation between Financial Intelligence Units (FIUs), including replacing Europol as the operator/host of FIU.net 2020.
  • Improving joint analysis of suspicious transactions to enhance the effectiveness of AML/CFT efforts.

Public/Private Partnerships and Implementation

  • Improving public/private partnerships in making better use of financial intelligence.
  • Ensuring effective transposition and implementation of existing AML/CFT directives.
  • Launching infringement proceedings against member states for failing to transpose 5AMLD.
  • Monitoring the establishment by member states of public registers of beneficial ownership.

International Cooperation

  • Playing a more prominent role in setting international standards in AML/CFT rules, including representing the EU at the Financial Action Task Force (FATF).

Considerations and Challenges

While the Commission’s approach is welcomed, some elements deserve careful consideration:

  • Transforming key AML/CFT provisions into an EU regulation may not achieve its intended aim of strengthening compliance due to disparate national legal and regulatory systems.
  • The ever-evolving schemes put in place by criminals/terrorists to transfer funds may render the EU regulation insufficiently flexible and dynamic.
  • Any reform of EU AML/CFT rules must fully respect the principles of independence and self-regulation of the legal profession.

Conclusion

The Commission’s Action Plan aims to strengthen the EU’s AML/CFT framework, promote effective enforcement, and address regulatory fragmentation. While some elements require careful consideration, the plan represents a significant step towards enhancing the EU’s ability to combat money laundering and terrorist financing.