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Money laundering: Preventing use of the financial system
The free movement of capital and the freedom to provide services are fundamental freedoms enshrined in the Treaty establishing the European Community. The European Union has adopted the Directive with a view to preventing the use of the financial system for money laundering without impeding the freedoms spelt out in the EC Treaty.
This Directive represents the first stage in combating money laundering at Community level. At international level, the relevant texts are the 40 recommendations of the Financial Action Task Force (FATF), which were last updated in June 2003.
The Directive defines the concepts of credit institution, financial institution and money laundering. In the case of money laundering, it takes over the definition given in the 1988 United Nations Convention against illicit traffic in drugs, specifying the following conduct when committed intentionally:
- the conversion or transfer of property derived from criminal activity for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such activity in evading the legal consequences of his action;
- the concealment or disguise of the true nature, source, location, disposition, movement or rights with respect to, or ownership of, property, knowing that such property is derived from criminal activity or from an active participation in such activity;
- the acquisition, possession or use of property, knowing, at the time of receipt, that such property was derived from criminal activity or from an active participation in such activity;
- participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of such actions.
Member States must ensure that money laundering is prohibited and that credit and financial institutions require identification of their customers by means of supporting evidence unless the customer is also a credit or financial institution. Derogations are laid down for certain insurance policies. The identification requirement also applies for any transaction involving a sum amounting to 15 000 or more.
Credit and financial institutions are required to keep a copy or the references of the evidence required, for a period of at least five years after the relationship with their customer has ended, as well as supporting evidence and records of transactions for a period of at least five years following execution of the transactions.
Credit and financial institutions must cooperate fully with the authorities responsible for combating money laundering. Those authorities may give instructions not to execute an operation which they know or suspect to be related to money laundering.
Credit and financial institutions may not disclose to anyone that information has been transmitted to the authorities or that an investigation is being carried out. The disclosure in good faith to the authorities of information shall not involve the credit or financial institution in liability of any kind.
The competent authorities must inform the authorities responsible for combating money laundering if they discover facts that could constitute evidence of money laundering.
Credit and financial institutions must establish procedures of internal control and communication in order to forestall and prevent operations related to money laundering and take appropriate measures so that their employees are aware of the provisions contained in the directive.
A contact committee has been set up under the aegis of the Commission, composed of persons appointed by the Member States and of representatives of the Commission, whose function is to facilitate consultation.
The Member States may adopt or retain in force stricter provisions to prevent money laundering.
One year after 1 January 1993, whenever necessary and at least at three yearly intervals thereafter, the Commission is to draw up a report on the implementation of the Directive and submit it to the European Parliament and the Council.
This act is affected by Case C-176/03 of the Court of Justice of the European Communities regarding the distribution of powers in criminal matters between the European Commission and the Council of the European Union.
|Act||Entry into force||Deadline for transposition in the Member States||Official Journal|
|Directive 91/308/EEC||01.01.1993||01.01.1993||OJ L 166 of 28.06.1991|
|Amending act(s)||Entry into force||Deadline for transposition in the Member States||Official Journal|
|Directive 2001/97/EC||28.12.2001||15.06.2003||OJ L 344 of 28.12.2001|