TALLINN – The European Commission on Thursday put forward a comprehensive approach to further strengthen the EU's fight against money laundering and terrorist financing.
The European Commission has published an ambitious and multifaceted action plan that sets out concrete measures that the Commission will take over the next 12 months to better enforce, supervise and coordinate the EU's rules on combating money laundering and terrorist financing. The aim of this new, comprehensive approach is to shut down any remaining loopholes and remove any weak links in the EU's rules.
"We need to put an end to dirty money infiltrating our financial system. Today, we are further bolstering our defenses to fight money laundering and terrorist financing, with a comprehensive and far-reaching action plan. There should be no weak links in our rules and their implementation. We are committed to delivering on all these actions -- swiftly and consistently -- over the next 12 months. We are also strengthening the EU's global role in terms of shaping international standards on fighting money laundering and terrorism financing," Executive Vice-President Valdis Dombrovskis said in a press release.
The Commission on Thursday also published a more transparent, refined methodology to identify high-risk third countries that have strategic deficiencies in their anti-money laundering and countering terrorist financing regimes that pose significant threats to the EU's financial system. This will enhance the EU's engagement with third countries and ensure greater cooperation with the Financial Action Task Force (FATF).
Finally, the Commission also adopted a new list of third countries with strategic deficiencies in their anti-money laundering and counter-terrorist financing frameworks.
Thursday's action plan is built on six pillars, each of which is aimed at improving the EU's overall fight against money laundering and terrorist financing, as well as strengthening the EU's global role in this area. When combined, these six pillars will ensure that EU rules are more harmonized and therefore more effective. The rules will be better supervised and there will be better coordination between member state authorities.
Firstly, the Commission will continue to monitor closely the implementation of EU rules by member states to ensure that national rules are in line with the highest possible standards. In parallel, Thursday's action plan encourages the European Banking Authority (EBA) to make full use of its new powers to tackle money laundering and terrorist financing.
Secondly, while current EU rules are far-reaching and effective, member states tend to apply them in a wide variety of different manners. Diverging interpretations of the rules therefore lead to loopholes in our system, which can be exploited by criminals. To combat this, the Commission will propose a more harmonized set of rules in the first quarter of 2021.
Thirdly, it is currently up to each member state to individually supervise EU rules in this area and as a result, gaps can develop in how the rules are supervised. In the first quarter of 2021, the Commission will propose to set up an EU-level supervisor.
The fourth pillar involves a coordination and support mechanism for member state financial intelligence units. Financial intelligence units in member states play a critical role in identifying transactions and activities that could be linked to criminal activities. In the first quarter of 2021, the Commission will propose to establish an EU mechanism to help further coordinate and support the work of these bodies.
The fifth pillar concerns enforcing EU-level criminal law provisions and information exchange. Judicial and police cooperation, on the basis of EU instruments and institutional arrangements, is essential to ensure the proper exchange of information.The private sector can also play a role in fighting money laundering and terrorist financing. The Commission will issue guidance on the role of public-private partnerships to clarify and enhance data sharing.
Finally, the EU is actively involved within the Financial Action Task Force and on the world stage in shaping international standards in the fight against money laundering and terrorist financing. The EU is determined to step up its efforts so that it is a single global actor in this area. In particular, the EU will need to adjust its approach to third countries with deficiencies in their regime regarding anti-money laundering and countering terrorist financing that put its single market at risk. The new methodology issued alongside this action plan on Thursday provides the EU with the necessary tools to do so. Pending the application of the revised methodology, Thursday's updated EU list ensures better alignment with the latest FATF list.
Under the Anti-Money Laundering Directive (AMLD), the Commission has a legal obligation to identify high-risk third countries with strategic deficiencies in their regime regarding anti-money laundering and countering terrorist financing. Pending the application of the refined methodology, the Commission on Thursday revised its list, taking into account developments at international level since 2018. The new list is now better aligned with the lists published by the FATF.
Countries that have been listed include the Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Panama and Zimbabwe. Countries that have been delisted are Bosnia and Herzegovina, Ethiopia, Guyana, Lao People's Democratic Republic, Sri Lanka and Tunisia.