The New EU Draft Money Laundering Directive: A Case of Inter‐Institutional Synergy
| Pages | 325-335 |
| Published date | 01 February 2000 |
| Date | 01 February 2000 |
| DOI | https://doi.org/10.1108/eb027246 |
| Author | Constantin Stefanou,Helen Xanthaki |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 3 No. 4
The New EU Draft Money Laundering Directive:
A Case of Inter-Institutional Synergy
Constantin Stefanou and Helen Xanthaki
INTRODUCTION
Seen as one of the major international instruments
in the fight against organised crime, the 1991
Money Laundering Directive 91/308/EEC1 has
been the EU's main weapon in its endeavours to
ensure that the liberalisation of the financial markets
and the consequent freedom of capital movements
'. . . is not used for undesirable purposes, such
as money laundering'.2 However, in view of
changes in the 1990s at the national and EU levels
and in the international environment, the 1991
directive is no longer considered an effective and
adequate legislative instrument in the field of
money laundering. The legislative response of the
EU to these changes is the Draft Money Laun-
dering Directive which has recently been put
forward by the Commission and has been — some-
what unexpectedly — wholeheartedly supported
by both the Council and the European Parliament
(EP).3
Cooperation between the EU's central institu-
tions is the basis for all progress at the EU level.
At the same time, inter-institutional cooperation
or rather the lack of it is often the stumbling
block and a source of consternation for the limited
progress achieved by the EU in various policy
areas.
Indeed, academic literature on the EU is
littered with case studies of failed, stalled or prob-
lematic policy initiatives or reforms as a result
of inter-institutional tension. The Commission-
Council-EP relationship and role in policy
making, however, are not always filled with ten-
sion. Often, the 'needs' of the Community are so
clear and well understood by all key actors that
synergy rather than rivalry is the order of the
day. In such cases progress is usually swift and
the outcome, be it a regulation or a directive or
a dDecision, is rarely contested.
This paper examines the European Commission's
Draft Money Laundering Directive and attempts to
assess the reasons behind the central EU institutions'
concerted effort to proceed with reform of the exist-
ing 1991 directive.
THE PROCESS
The process leading to the proposal of a draft
directive amending the original 1991 Money
Laundering Directive began as early as 1996. In
fact, one of the first official comments on the inade-
quacy of the 1991 directive was made by the then
European Commissioner for Financial Services and
the Internal Market on 16th November, 1996.
Following the failed attempt of the EU to respond
adequately to the increasingly urgent and fast-rising
problem of money laundering both within and out-
side the boundaries of the EU, demonstrated clearly
in the first Commission report of 21st June, 1996 on
the implementation of the Money Laundering Direc-
tive,
in a speech on the economic and monetary
policy of the EU, Mario Monti suggested that the
scope of the directive be broadened to cover casinos,
art dealers, real estate agents and lawyers.
An excellent, albeit
brief,
presentation of the
reasons which led the EU to consider amending
the Money Laundering Directive can be found in
the 1997 report on the action plan to combat
organised crime drafted by the Committee of Civil
Liberties and Internal Affairs and addressed to the
EP.5
In its motion for a resolution directed to the
EP the committee acknowledged that the alarming
levels of organised crime within the EU with particu-
lar reference to (amongst others) money laundering
can only be addressed effectively by concentrating
on increasing the risk of detection. Recom-
mendation 12 of the final draft of the resolution
adopted by the EP 'demands' that the Council speci-
fies the duties of vulnerable professions in the area of
money laundering and enhances its cooperation with
the professional associations of the vulnerable profes-
sions (such as notaries, lawyers, accountants and
auditors) so as to protect them from the influences
of organised crime.
The rationale behind this call lies with the
consideration that members of these vulnerable pro-
fessions run an increased risk of coming into contact
with members of organised crime as an unavoidable
result of the nature of their professional activities,
Journal
of
Money Laundering Control
Vol.
3,
No.
4,
2000,
pp.
325-335
© Henry Stewart Publications
ISSN 1368-5201
Page 325
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