The fight against financial crime, including anti-money laundering (AML) and countering the financing of terrorism (CFT), is crucial for maintaining financial stability and security in Europe. It also ensures the integrity of financial markets. Effective AML/CFT measures protect the financial system from misuse, support economic stability, and uphold the trust and safety of financial transactions across the EU. These efforts are essential for preventing illegal activities and safeguarding the overall financial ecosystem.
Fighting money laundering and terrorist financing is crucial for ensuring global security, the integrity of the financial system, financial stability, and sustainable economic growth.
What the EU is Doing and Why
The European Union (EU) has implemented a comprehensive legislative framework to combat money laundering and terrorist financing (AML/CFT). The efforts aim to prevent the financial system from being exploited by criminals and terrorists. The European Commission carries out regular risk assessments to identify and address risks to the EU internal market. Since the adoption of the first Anti-Money Laundering Directive in 1990, the EU has continuously updated its laws to address emerging threats.
Key Components of EU AML/CFT Framework
Customer Due Diligence (CDD): Obliged entities, such as banks, must verify the identity of clients, monitor transactions, and report suspicious activities. This requirement is central to preventing the misuse of the financial system.
Legislative Updates: The EU has continuously revised its legislation to address new risks, including those related to virtual assets and crowdfunding. For example, the Regulation on the Traceability of Transfers of Funds (TFR) ensures the traceability of crypto-asset transfers, aligning with the Financial Action Task Force (FATF) standards, and will apply from December 2024.
Directive (EU) 2019/1153: This directive enhances the use of financial information by law enforcement. It grants authorities direct access to bank account information and financial transaction data, speeding up investigations and improving the fight against cross-border crime.
Supranational Risk Assessment: The European Commission publishes an annual report that evaluates the vulnerability of financial products and services to money laundering and terrorist financing. This report provides a comprehensive mapping of risks and offers recommendations to Member States, European Supervisory Authorities, and obliged entities to mitigate these risks.
New EU Authority (AMLA): The Regulation (EU) 2024/1620 on the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) establishes a new EU authority to transform AML/CFT supervision. AMLA will coordinate national authorities and ensure the private sector consistently applies EU rules. It will also support cooperation among Financial Intelligence Units (FIUs).
Regulatory technical standards developed by the European Supervisory Authorities (ESAs) guide credit and financial institutions on mitigating money laundering risks in third countries.
Cooperation and Expert Groups
The Expert Group on Money Laundering and Terrorist Financing regularly meets to advise the Commission on policy and legislation.
The EU FIU's Platform facilitates cooperation among national FIUs and provides expertise to the Commission.
An Expert Group on eID and remote Know-Your-Customer (KYC) processes explores electronic identification issues, supporting the Commission in drafting relevant policies.