Tighter money laundering

The European Commission has announced two new proposals to strengthen existing regulations on anti-money laundering and fund transfers, states Harris & Co Accountants Northampton

One is a directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing. The second is a regulation on information accompanying transfers of funds to secure ‘due traceability’ of these transfers. Both are designed to provide for a more targeted and focused risk-based approach.

The directive includes a requirement for companies to maintain records as to the identity of those who stand behind the company in reality. It also clarifies the rules on customer due diligence and on the provisions for dealing with politically exposed persons.

The Commission says the regulations are also intended to cover new threats and vulnerabilities, for example by extending coverage to the ‘gambling sector’, rather than just casinos as previously, and to letting agents as well as other estate agents. It also includes an explicit reference to tax crimes.

The regulations cover anyone dealing in goods or providing services for cash payment of €7,500 (about £6,500) or more, reduced from the current €15,000 threshold. They are also aimed at strengthening cooperation between different national Financial Intelligence Units.

Internal Market and Services Commissioner Michel Barnier said: ‘In addition to the criminal law approach, a preventive effort via the financial system can help to stop money-laundering. Our aim is to propose clear rules that reinforce the vigilance by banks, lawyers, accountants and all other professional concerned.’

The ICAEW welcomed the proposals. Felicity Banks, ICAEW’s head of business law said: ‘The proposed changes will mean that anti-money laundering laws are consistently stronger across the whole of the EU, which is a valuable step forward. Moreover, these proposals will also ensure compatibility with the recently revised international standards.’

‘Enforcement is also a key issue. The best rules in the world will be useless without proper and consistent enforcement across all member states. The extension and improvement to sanctions for non-compliance is therefore important,’ Banks said.