The new weapon for combating money laundering in the EU
| Published date | 01 April 2005 |
| DOI | https://doi.org/10.1108/13685200510621163 |
| Date | 01 April 2005 |
| Pages | 115-121 |
| Author | He Ping |
| Subject Matter | Accounting & finance |
The New Weapon for Combating Money Laundering
in the EU
He Ping
INTRODUCTION
This paper comments on the Directive 2001/97/EC of
the European Parliament and on the Amending Coun-
cil Directive 91/308/EEC on Prevention of the Use of
the Financial System for the Purpose of Money Laun-
dering. It ®rst analyses the background of the 2001 EC
Directive, then explains what changes have been made
by this new directive, compared to the 1991 EC Direc-
tive. Finally it makes some comments on the directive.
BACKGROUND
The 1991 Directive was a landmark in the ®ght against
money laundering and was frequently cited as one of
the major international instruments, alongside the
1988 UN Vienna Convention, the 1990 Strasbourg
Convention and the 40 Recommendations of the
Financial Action Task Force (FATF) on Money Laun-
dering. However, in view of changes both at the
national level and international level, it is no longer
considered an eective and adequate legislative
instrument in this ®eld.
At the national level, many member states have
already gone beyond the minimum standards estab-
lished by the 1991 Directive, since Article 15 under
the directive stipulates that `the Member States may
adopt or retain in force stricter provisions in the ®eld
covered by this directive to prevent money laun-
dering'. By way of illustration, all member states
criminalise money laundering rather than only pro-
hibit this phenomenon, which obviously goes
beyond the duty required by the directive. In addition,
the directive does not require but merely encourages
the prohibition of non-drug related money launder-
ing, while most member states have already extended
the scope of predicate oences to other crimes in their
legislation.
At the international level, some new eorts have
already been made to respond to the development of
money laundering activities. The FATF revised the
original 40 Recommendations which resulted in the
conclusion of the 1996 Recommendations.
1
For
example, the FATF requires that `each country
should extend the oence of drug money laundering
to one based on serious oences'.
2
The FATF has
noted a shift in laundering activities from the tra-
ditional ®nancial sector to non-®nancial professions
or enterprises.
3
Furthermore, some time after the
1999 proposal to amend Council Directive 91/308/
EC one year before the formal amendment of the
directive in 2001, the UN Convention against Trans-
national Organized Crime came into being in
December 2000. It requires contracting parties to
apply to the widest range of predicate oences
4
and
to extend the coverage to other bodies apart from
banks and non-bank ®nancial institutions.
5
In general,
these eorts suggest higher requirements to combat
money laundering, since there has been an increase
in and development of schemes of money laundering
activity.
In the same way, at the European level, much
response has already been made to strive to improve
the measures. The Action Plan on organised crime
adopted by the Amsterdam European Council
referred to the revisions that extend the obligation of
suspicious transaction reporting to persons and pro-
fessions outside the ®nancial sector and to the proceeds
of all oences connected with serious crime (rather
than just drug tracking).
6
The plan also observed
that criminalisation of laundering of the proceeds of
crime should be made as general as possible.
7
Simi-
larly, the European Parliament noted that the 1991
Directive failed to respond adequately to the increased
money laundering activity and called for additional
measures to enhance the European Union's anti-
money laundering eort. The Parliament `called on
the Commission to present a proposal for a further
directive to ®ll in the gaps it perceived in the European
Union's anti-money laundering defences.'
8
It also
called for the money laundering oence to apply to
the laundering of the proceeds of all organised crime
and wanted the Directive to cover directly all the
occupations and types of undertaking involved or
likely to be involved in money laundering.
9
Since the Directive was adopted in 1991 both the
money laundering threat and the response to that
threat have evolved. It is the view of the Commis-
sion, supported by the European Parliament and the
Page 115
Journal of Money Laundering Control Ð Vol. 8 No. 2
Journalof Money Laundering Control
Vol.8, No. 2, 2004, pp. 115± 121
#HenryStewart Publications
ISSN1368-5201
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