1. Anti-Money Laundering
The European future priorities in tackling money laundering
ALDA
Brussels,
European Commission
DG Internal Market and Services
David Schwander

2. The issue… Criminal proceeds: US$ 2.1 trillion in 2009
Amount available for money laundering: US$ 1.6 trillion
Amount of funds intercepted by law enforcement: <1%
Amount of seizures: <0,2%
Source: UNODC, Commission SWD(2013) 21

3. Approach to tackle ML/TF
Global approach through FATF
Short term priorities (4th AMLD and FTR)
Long term priorities

4. Financial Action Task Force (FATF)
Global standard-setter for measures to combat ML and TF
Intergovernmental body with 36 members and the participation of over 180 countries through a global network of FATF-style regional bodies
Commission = one of founding members of FATF
original FATF standards amended in the aftermath of 9/11, fully revised in June 2003 ( Third AMLD), latest revision of standards in February 2012 ( Commission's proposals, Fourth AMLD)

5. Global approach FATF G8 and G20 European Council
"The FATF calls upon all countries to implement effective measures to bring their national systems for ML, TF and PF into compliance with the revised FATF Recommendations" (FATF Recommendations, Feb. 2012)
G8 and G20
"Our financial systems are exposed to significant risks from money laundering and terrorist financing. We fully support the FATF Standards and commit to implementing them effectively" (June 2013 G8 Communiqué).
European Council
"There is a need to deal with tax evasion and fraud and to fight money laundering, within the internal market and vis-à-vis non-cooperative third countries and jurisdictions, in a comprehensive manner (…). The revision of the third anti-money laundering Directive should be adopted by the end of the year;" (May 2013 European Council Conclusions).

6. Current legal framework
Third Anti-Money Laundering Directive (2005/60/EC)
In place since 2005
European framework built around the international FATF standards
applies to financial sector, lawyers, notaries, accountants, real estate agents, casinos, company service providers and all dealers in goods when payments are made in cash in excess of €15 000
Changes in international standards (February 2012)

7. Why the revision?
to adapt legal framework to counter new threats of ML and TF
to reflect recent changes due to revised FATF Recommendations
to counter criticism that MS implementation has been inconsistent with FATF Recommendations (e.g. on simplified due diligence)
to strengthen the Internal Market

8. The Commission's proposals
A Directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (4th AML Directive)
A Regulation on information accompanying transfers of funds
basic approach:
 keep text where possible
 streamline text where possible

9. Principal obligations imposed by current framework
Identification of customer and the “Beneficial Owner”
Obligation to report suspicious transactions
Ongoing monitoring
Record keeping
Supervision
Staff protection

10. Main elements of new DIRECTIVE
risk-based approach
coverage of tax crimes as predicate offence
coverage of gambling sector  beyond FATF requirements
cash payments of €7 500 or more  beyond FATF requirements
customer due diligence (CDD)
Politically Exposed Persons (PEPs)
information on beneficial owner  beyond FATF requirements
reinforcement of sanctioning powers  beyond FATF requirements
Cooperation between Financial Intelligence Units
European Supervisory Authorities (ESA)

11. Risk-based approach
Understand ML/TF risks, target resources more effectively and apply preventive measures that correspond to risks of particular sectors/activities
Evidence-based measures at three levels:
Member States  identify, understand and mitigate risks + share results
Institutions and persons covered by Directive  identify, understand and mitigate risks and document/update assessment of risk
Supervisors  resources can be focused on areas where risks of ML/TF are greater
Risk assessment work also carried out at supra-national level
Make CDD-rules more risk sensitive – based on indicative and non-exhaustive risk factors:
enhanced measures where risks are greater,
simplified measures where risks are demonstrated to be less

12. Key Milestones in the process
Feb 2012 Adoption of FATF international standards
Feb 2013 Adoption of COM proposal for a 4th AML Directive
June 2013 G8 Communiqué – fight against tax evasion is now a major topic and linked to the AML debate
March 2014 – EP completes its first reading
June 2014 – Council, under GR Presidency, agrees on a general approach
October 2014 – kick off of Trilogues – to reconcile EP and Council positions
End 2014 – Political agreement?
2 years transposition period

13. Future challenges Ensure effective implementation of AMLD and RBA
EU Supranational risk assessment
Improve operational cooperation between all players - public and private sector
04/02/2013

14. Thank you for your attention!