BlogEvents & NewsLegal ResourcesA New European Strategy Against Money Laundering

July 27, 20210

European Union is taking different measures to strengthen  its internal market. On July 20 a new strategy on security was introduced. Recognizing the new demographic transformation, climatic change, and globalization imposed by the ever-growing digital technology, the new 2021- 2025 strategy aims to promote innovation by keeping safe at the same time, citizens’ rights, democratic institutions and single markets’ prosperity.

To protect European economy from threats of organized crime are taken new incentives against anti-money laundering and countering terrorism financing.

What is Money Laundering?

Money laundering is a process where an enormous amount of money acquired by a criminal activity, is “laundered” in order to give the revenues a legal background. The capital put from the criminal activity is illegal, and the ‘laundering process’ makes it legal.

The need for a new Strategy

Data from the United Nations Office on Drugs and Crime show that money laundering transactions account for $800 billion to $2 trillion annually, or 2% to 5% of the global gross domestic product. On a European level the illegal earnings compute 1% of the GDP.

The recent legislative proposal aims to establish a new Anti-Money Laundering Authority (AMLA) in order to strengthen the cooperation between member states. AMLA will be a central body, where all the national authorities will report their respective compliance with EU law against money laundering. It will have physical headquarters (like any other EU Institution), and will serve as a directly supervisory institution only for the financial establishments showing possible risk. Any transaction surpassing the EU threshold of €10,000 on large cash payments will be monitored as a probable hazard. This practice is followed in some countries, such as Greece, while stronger economies such as Austria and Germany have no limit at all. Despite that, a report by the German governmental Financial Intelligence Unit (FIU) found 77,252 cases of money laundering.

Anyhow, for the AMLA to start its activity, the proposed legislative package needs to be transposed in a Directive. After the European Parliament and Council will deliver thoughts and words upon, its implementation will start, which is expected to be by the end of 2024.

Since the money laundering might affect any transaction made at a Union level, or internationally, the new strategy proposes stronger cooperation with the third countries. The Financial Action Task Force (FATF), established by the G7, will provide any information or recommendation made to a country, to the AMLA. Any country showing little to no effort on combating money- laundering, will be listed either in a ‘black list’ or ‘grey list’ (depending on the displayed risk). Moreover, the EU will have the right to list countries not announced by the FATF. Measures taken will correspond to the risk posed by the country.  

The EU package will not be the last. It will introduce:

  • A Regulation on the Mutual Recognition of Freezing and Confiscation Orders;
  • A Directive on Combating Money Laundering by Criminal Law;
  • A Directive Laying Down Rules on the Use of Financial and Other Information to Combat Serious Crimes;
  • A European System of Financial Supervision.

As the Commissioner responsible for financial services financial stability and Capital Markets Union, Mairead McGuinness, said “These measures will help us protect the integrity of the financial system and the single market.” stronger cooperation between member states is crucial to protect the economy and stop any dirty money from entering the EU financial system.

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