EU advances on rules against money laundering, terrorist financing and tax evasion
Improving the fight against money laundering and terrorist financing is key for me as European Commissioner for Justice.
It is a matter of security but also of fairness. Lack of transparency allows criminals to finance terrorist activities. Lax anti-money laundering rules allow tax evaders to inject the amounts "saved" discretely back into the economy. These lost revenues prevent governments from making necessary investments in education or infrastructure and they might increase taxes on honest citizens.
The Panama papers revealed how costly tax evasion is for the European economy
When criminals launder money gained through for instance drug trafficking, they "clean it up" to erase any trace of their illegal origins. While it is difficult to evaluate the scale of this crime, some estimates consider that every year 2 to 5% of GDP worldwide is lost through money laundering. In addition, criminal and terrorist organisations need that money to keep their criminal networks running, to recruit, prepare and commit terrorist acts. Stopping money laundering stops criminals from planning anything illegal.
What is the EU doing to fight money laundering?
Today, new anti-money laundering rules enter into force across the EU. The new rules will rein- force transparency and will ensure that money laundering and terrorist financing are efficiently prevented across the European Union.
They reinforce the checks carried out by banks or any institution confronted to risky transactions. As of today, when establishing business relationships and before carrying out transactions requested by their clients, financial institutions have to carry out more systematic, in-depth checks taking into account different risk factors such as customer, product, geography and channel. They will also have to prove that they have taken the appropriate steps to mitigate these risks.
Another important novelty is the reinforcement of transparency requirements by introducing a requirement for companies to hold accurate and updated information on who are their real owners, their "beneficial owner". Member states are now required to establish central registers of beneficial ownership for companies and trusts.
These registers will allow any bank to find out quickly and easily the real person behind the company who wishes to carry out a transaction. This will enable banks to see through complex company structures, allowing them to block any suspicious transactions without alerting the client.
The new directive now includes gambling companies, a sector often used by organised crime to launder money from illegal proceedings. All gambling providers will now have to check the player's identity and the consistency of his transactions, including the source of funds. They will have to report any suspicion of money laundering to the national competent authority (Financial Intelligence Unit) that will investigate the case and report it to the police.
EU member states should have these rules correctly implemented as of today. I urge member states that have not yet done so to do so without delay. Lower standards in one country will maintain loopholes and weaken our fight across the EU.
Reacting to the Panama papers scandal and to new terrorist risks, the Commission proposed last July to further strengthen the anti-money laundering rules. I urge the European Parliament and the member states to finalise their discussions as soon as possible to ensure that our rules are adapted to the current threats. Having a robust, preventive framework is key in the fight against organised crime and terrorism. With today's new rules we are better equipped to fight these crimes together.