In Focus Consumer Credit


The EU’s plan to tackle money laundering


The EU’s proposed central authority for investigating money laundering cannot come soon enough


Nicola Sharp Legal director, Rahman Ravelli nicola.sharp @rahmanravelli.co.uk


It now appears that the European Union (EU) is convinced of the need for a central authority to tackle money laundering. EU finance ministers are set to authorise


the European Commission to draft plans for an enforcement body that would be independent and would have what have been termed direct powers to oversee the anti-money laundering efforts in all EU member-states. If and when it comes into existence it will


be authorised to police, among other things, financial institutions’ compliance with EU rules regarding anti-money laundering due diligence. The move comes at a time when the issue


of money laundering has gained increased prominence, due largely to Transparency International’s report ‘At Your Service’, which painted a fairly alarming picture of the extent to which laundered money has seeped into many, if not all, aspects of UK life. The EU, it seems, has at least recognised


that more needs to be done. The way loopholes have been exploited by those looking to launder money in Europe, the damage this does to the reputation of the financial system and the potential effect on EU members’ economies have all been noted by the EU. It may be unfair to class it as a wake-up call: the EU has been aware of the problem of money laundering and has been taking steps to tackle it for years. But now the EU at least does seem to


recognise that more needs to be done – and it needs to be more coordinated than it has been so far.


January 2020


Short of details At this stage, we are short of precise details. Some EU members want an all-new body to take on the role, others believe the task could be given to the European Banking Authority (EBA) – even though some in the EU are far from happy with the EBA’s track record – while giving Europol new authorities has also been floated as a possible way forward.


The Fourth Money Laundering Directive


(4MLD) was introduced by the EU as a genuine and well-intentioned way to address the problem. And yet it was less than a year and a half ago that the European Commission’s justice commissioner Vera Jourova was berating 20 EU states for the slow and unsatisfactory transposition of 4MLD into their national laws. The fact that the justice commissioner


Now we have the Fifth Money Laundering Directive. Every EU member should be ready to implement this by January 20 2020. Yet only a supreme optimist would believe that this is likely


EU officials have said any final, agreed


plan could be introduced as regulations that apply directly to financial institutions as opposed to legislation, which would need members to adopt complementary national laws so it could be enforced in each state. But while the proposal at this stage lacks


clarity the need for something to be done is crystal clear. The EU has made repeated attempts to tackle money laundering and the results so far can be described as mixed at best.


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was openly criticising more than 70% of EU members for failing to meet their obligations regarding 4MLD is perhaps the starkest reminder that Europe has a problem. More than a year after the deadline for implementing 4MLD, a mere handful of member states had transposed it into national law. Now we have the Fifth Money Laundering


Directive. Every EU member should be ready to implement this by January 20 2020. Yet only a supreme optimist would believe that this is likely. The directives have served a purpose.


They have also shown that the EU is far from ignorant regarding money laundering. But ultimately they have illustrated the core of the problem – the EU has, until now, put its faith in a decentralised collection of national authorities to tackle an international issue that demands a concerted, coordinated and consistent approach. We may not know the exact details of how


the EU intends to create one body to take on the huge problem of money laundering. But what we do already know is that such action cannot come soon enough. CCR


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