EU welcomes directive on money-laundering and terrorist financing

The EU has welcomed the adoption of a new directive aimed at combating money-laundering and terrorist financing in Europe.

The need to combat money-laundering and terrorist financing was raised by the European Commission in 2016, in the wake of a number of acts of terrorism across the continent, as well as the Panama Papers scandal, during which documents from Panamanian law firm Mossack Fonseca indicated widespread use of offshore entities and bank accounts to hide crimes such as fraud and tax evasion.

The new EU directive will take a number of steps to combat money-laundering and terrorist financing in Europe by introducing a broad raft of new measures. These will include legislation to:

• Strengthen EU Financial Intelligence Units by introducing beneficial ownership registers to improve transparency;
• Increase access to information and centralised bank account registers by Financial Intelligence Units;
• Limit the use of prepaid cards and tackle the risks associated with terrorists using virtual currencies;
• Improve safeguards around financial transactions with high-risk third countries; and
• Ensure that registers or retrieval systems for centralised national bank and payment accounts are available in all member states.

The proposal will now be formally endorsed by the European Parliament and the Council of the European Union, at which point member states will have 18 months to implement the changes. The commission has characterised the new directive as vital to is broader security aims, and as a priority for the Juncker Commission.

What has the European Commission said about the directive?

European Commission Vice Presidents Frans Timmermans and Valdis Dombrovskis, and Commissioner Věra Jourová, issued a joint statement following the adoption of the directive. They expressed pride in the success of the directive, but warned that additional efforts will still be needed to combat terrorist financing.

The statement read: “We can be proud of the new measures, which will substantially improve the existing rules. We are today marking an important step in fighting against financial crime. But our work is not over. Fighting effectively against financial crime needs proper implementation of these rules and strong coordination amongst the different authorities.”

The commissioners concluded that they would remain committed to helping member states to put the new regulations into place, to ensure that all member states uphold high standards in the fight against money-laundering and terrorist financing.