The Evolving EU Anti-Money Laundering Regime
| Date | 01 April 2016 |
| DOI | 10.1177/1023263X1602300204 |
| Published date | 01 April 2016 |
| Author | Niovi Vavoula,Valsamis Mitsilegas |
| Subject Matter | Article |
23 MJ 2 (2016) 261
THE EVOLVING
EU ANTI-MONEY LAUNDERING REGIME
Challenges for Fundamental Rights and
the Rule of Law
V M* and N V**
ABSTRACT
Over the past twenty- ve years, the European Union has developed a far-reaching legal
regime aimed at countering money launder ing. e e volution of this regime has been
linked inextricably with the parallel development of global standards in the eld, most
notably by the Financial Action Task Force on Money Laundering (FATF). is article
will critically evaluate the content of EU anti-money laundering law, by putting forward
a comprehensive typology of the EU anti-money laundering regime as outlined in the
successive EU Anti-Money Launder ing Directives and consisting of three elements: the
criminalization of money laundering and terrorist nance; the prevention of money
laundering via the imposition of a series of duties on the private sector; and the focus on
nancial intelligence, via the establi shment and co-operation of nancial intelligence units
responsible for receiving and analysing repor ts received from the private sector. e article
will examine the evolution of EU law as regards all elements of anti-money laundering
law, by focusing in particular on the changes brought for ward by the post-Lisbon Fourth
Money Laundering Directive. e article will cast light on the in uence of the FATF in
shaping these standards and will highlight the impact of the ever expanding EU anti-
money laundering legal f ramework on fundamental rights and the rule of law.
Keywords: European criminal law; nancia l intelligence units; fundamental rights and
the rule of law; money launderi ng and terrorist nance; tax evasion
* Professor of Europea n Crimina l Law, Director of the Cri minal Justic e Centre and Head of the
Department of L aw, Queen Mary University of London .
** Research Assi stant in the Depar tment of Law, Queen Mary Universit y of London.
Valsamis Mitsi legas and Niovi Vavoula
262 23 MJ 2 (2016)
§1. IN TRODUC TION
Over the past twenty- ve years, the European Union has developed a far-reaching lega l
regime aimed at countering money laundering. e evolution of this regime has been
linked inextricably with the parallel development of global standards in the eld, most
notably by the Financial Action Task Force on Money Laundering (FATF). is article
will crit ically evaluate the content of EU anti-money laundering law, by putting for ward
a comprehensive typology of the EU anti-money laundering regime as outlined in the
successive EU Anti-Money Laundering Directives (AML Directives)
1 and consisting
of three elements: the criminalization of money laundering and terrorist nance; the
prevention of money laundering via the imposition of a series of duties on the private
sector; and the focus on nancial i ntelligence, via the establishment and co- operation of
nancial intelligence un its responsible for receiving and analysing report s received from
the private sector.
e article wi ll examine the evolution of EU law as rega rds all elements of anti-money
laundering law, by focusing in part icular on the changes brought forward by the post-
Lisbon Fourth Money Laundering Directive. e article wi ll cast light on the in uence
of the FATF in shaping these standards and h ighlight the impact of the ever expanding
EU anti-money laundering legal fr amework on fundamental rights and t he rule of law.
§2. AN EVOLVING LEGAL FRAMEWORK SHAPED BY
GLOBALIZATION
In examining the evolution of EU anti-money laundering law, it is essential to bear in
mind that the development of standards in the eld re ects a remark able combination
of global and regional standard-setting e orts. e Europea n Union has been active in a
number of international fora producing internationa l treaties in the eld, most notably i n
the United Nations (the main treaties bei ng the Vienna Convention in 1988, focusing on
the l aunderi ng of the p roceeds of drug tra cking, and t he Convention on Transnational
1 Council Dire ctive 91/308/EEC of 10 June 1991 on prevention of the use of t he nancial system for
the purpose of mone y laundering, [1991] OJ L 166/77 (the rst AM L Directive); Direc tive 2001/97/
EC of the European Pa rliament and of the Council of 4 December 2001 amending Cou ncil Directive
91/308/EEC on prevention of the u se of the nancial system for the pur pose of money launder ing,
and of the Counci l of 26October 2005 on th e prevention of the use of t he nancial system for the
purpose of money lau ndering and terrorist nancing (Text with E EA relevance), [2005] OJ L 309/15
(the third AML Di rective); Directive (EU) 2015/849 of the Eu ropean Parliament and of the C ouncil of
20May 2015 on the prevention of t he use of the nancial s ystem for the purpose s of money laundering
or terrorist nancing, amending Regulation (EU) No 648/2012 of the European Parliament and of
the Council, a nd repealing Direct ive 2005/60/EC of the European Pa rliament and of the Council a nd
Commission Di rective 2006/70/ EC (Text with EEA releva nce), [2015] OJ L 141/73 (the fourth AM L
Directive).
e Evolving EU Anti-Mone y Laundering Regi me
23 MJ 2 (2016) 263
Organised Crime, or the Palermo Convention, of 2000) and in the Council of Europe.2
However, even more central to the development of the EU anti-money laundering legal
framework has been the work of the Fina ncial Action Task Force (FATF).3
e FATF is an ad hoc body, established by the G7 in 1989 under the auspices of
the OECD.4 Its membership is selective, including OECD states at rst and expanding
since then to include ‘strategica lly important’ countries and largely to re ect nancial
globalization.5 When looking at FATF membership today, it is striking that all 15 ‘old’
EU Member States, along with t he Commission, are now full FATF members. However,
none of the 12 Member States which joined the EU in 2004 and 2007 is a FATF member
(they are all members of MONEYVAL – the Commit tee of Experts on the Evaluation of
Anti-Money Laundering Measures, e stablished in 1997 under the auspices of the Cou ncil
of Europe). is piecemeal membership mean s that the Union’s executive, the Europea n
Commission, can have an in uence together with certain Member States , in the shaping
of FATF standards and ensuring compliance w ith these standards, but that pa rticipation
in regional fora such as the C ouncil of Europe is equa lly important for the EU in order
to put forward a furt her layer of compliance with g lobal standards – with MONEYVAL
benchmarks are not li mited to Council of Europe standards but also i nclude FATF, UN
and EU anti-money laundering standards.6
e main normative output of the FATF has been a series of Recommendations,
evolving over time and coveri ng a wide range of aspects of t he ght against money
laundering. e 40 FATF Recommendations produced in 1990 were revised in 1996,
2003 and 2012, with money laundering counter-measures being deemed necessary to
counter a series of emerging and new t hreats, from drug tra ck ing to organized crime
to terrorism.7 e revisions of the FATF Recommendations have gone hand in hand
2 See V. Mitsilegas, ‘ e European Union and the G lobalisation of Cr iminal L aw’, 12 Cambridge Yearbook
of European Legal St udies 2009–2010 (2010), p.337–407.
3 V. Mitsilegas, ‘Global Gove rnance of Crime “ e European Union and the Global Gove rnance of
Crime”’, in V. Mitsilegas, P. Alld ridge and L. Cheliot is (eds.), Globalisation, Criminal Law and Criminal
Justice. eoretical , Comparative and Transnational Perspec tives (Hart, 2015), p.153–198, whereupon
this sect ion draws.
4 For a detailed a nalysis of the role and work of the FATF, see B. Gilmore, Dirty Money: e Evolution
of Internationa l Measures to Counter Money Laun dering and the Financing of Terrori sm (4th edition,
Council of Europe P ublishing, 2011), Ch. 4–6. Gil more characterize s the FATF as an ‘ad hoc grouping
of governments and othe rs with a complex but highly fo cused agenda’, ibid., p.92.
5 e current membersh ip criteria include , along with compl iance with FATF stand ards,
‘strategic impor tance’: see FATF, FATF Membership Policy, www.fatf-ga .org/pa ges/aboutus/
membersandobservers/fatfmembersh ippolicy.html.
6 V. Mitsilegas, ‘Regiona l Organisations and t he Suppression of Transnational Cri me’, in N. Boister and
S. Currie (eds.), Routledge Han dbook on Transnational Crimin al Law (Routledge, 2014), p.73–89.
7 See V. Mitsilegas, ‘Cou ntering the Chameleon reat of Dirty Money: “Ha rd” and “So ” Law in the
Emergence of a Global Re gime against Money Laund ering and Terrorist Finance’, in A. Ed wards and
P. G il l (e ds .), Transnat ional Organised Cri me: Perspectives on Glo bal Security (Ro utled ge, 20 03), p.195 –
211.
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