The EU's preventive AML/CFT policy: asymmetrical harmonisation
| DOI | https://doi.org/10.1108/13685201111127812 |
| Date | 10 May 2011 |
| Pages | 170-182 |
| Published date | 10 May 2011 |
| Author | Melissa van den Broek |
| Subject Matter | Accounting & finance |
The EU’s preventive AML/CFT
policy: asymmetrical
harmonisation
Melissa van den Broek
Utrecht University, Utrecht, The Netherlands
Abstract
Purpose – This article aims to consider the role of the European Union (EU) in the prevention of
money laundering and to show that the EU has a lot more to win in this field of policy.
Design/methodology/approach – This article is based on a literature study and a thorough
analysis of the EU Directives on the prevention of money laundering.
Findings – Whereas, the material norms for entities subject to regulation have been harmonised and
adjusted to the risk-based approach at European level, the norms regarding the enforcement
instruments have mostly been left to the Member States’ legislation. As a result, there exists a
“patchwork” of enforcement mechanisms throughout the EU.
Research limitations/implications – This article focuses on the prevention of money laundering
on the level of the EU only; no connection is made to the international or to the national level.
Originality/value – This article does not provide a value judgment on the preventive rules at
European level as such, but rather it offers an academic perspective on the role of the EU in the
prevention of money laundering.
Keywords European Union,Money laundering, Law enforcement
Paper type Conceptual paper
1. Introduction
Over the past 20 years, a “twin-track approach” against money laundering has evolved
(Stessens, 2000, pp. 82 and 108-12). On the one hand, this twin-track approach consists of
a preventive policy, which aims at the prevention of money laundering through the
setting of identification and reporting obligations. On the other hand, the twin-track
approach consists of a repressive policy of which the objective is to punish the money
launderer. This article focuses on the preventive anti-money laundering and combating
the financing of terrorism (AML/CFT) policy at the level of the European Union (EU).
The EU became involved in the fight against money laundering at the beginning of
the 1990s with a directive on the prevention of the use of the financial system for the
purpose of money laundering (First Directive) (European Union, 1991). This directive
was amended by the Second Directive in 2001, which, among other things, broadened
the scope ratio personae of the First Directive to also include non-financial institutions
like notaries and lawyers[1] (European Union, 2004). Directive 2005/60/EC replaced the
First and Second Directive (European Union, 2005). Like the Second Directive, the Third
Directive was a response to the revision of the Financial Action Task Force (FATF)
Recommendations; its main purpose being to provide a common EU basis for
implementing these FATF Recommendations[2].
The development of the preventive AML/CFT policy at European level by means of
these three directives is interesting, because of the different approaches that have been
employed therein[3]. The First and Second Directive carried a so-called rule-based
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
JMLC
14,2
170
Journal of Money Laundering Control
Vol. 14 No. 2, 2011
pp. 170-182
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201111127812
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