Commission assesses risks and implementation shortcomings in fight against money laundering and terrorist financing: Q&A (2)

02 August 2019

The Commission is presenting a Communication summarising a set of reports relating to the implementation of the Union’s legal anti-money laundering/ counter terrorism financing framework. The findings aim to point to where implementation can be improved and to foster new discussions with relevant stakeholders to further improve the EU’s work in this field.

3. Financial Intelligence Unit (FIU) report
What are the Financial Intelligence Units?
An FIU is a central, national unit established in each Member State that is responsible for receiving and analysing information from private entities on financial transactions, considered to be linked to money laundering and terrorist financing. The FIUs share the results of their analyses with the competent authorities where there are grounds to suspect money laundering, associated predicate offences or terrorist financing. The EU – and the international – anti-money laundering and counter terrorist financing framework relies on this analysis.
The EU FIU’s Platform has been at the core of identifying the issues set out in the report. This is an informal expert group set up in 2006 by the Commission. It gathers Financial Intelligence Units from EU countries . Its main purpose is to promote cooperation among the FIUs and provide advice and expertise to the Commission on issues related to FIUs. The European Commission participates in the Platform and provides support.

Why did the Commission adopt this report?
The 5th Anti-Money Laundering Directive requires the Commission to assess the framework for Financial Intelligence Units’ cooperation with third countries and obstacles and opportunities to enhance cooperation between Financial Intelligence Units in the European Union, including the possi¬bility of establishing a coordination and support mechanism. The new Cash Controls Regulation also includes this requirement, as well as the Directive on access to financial and other information.

What are the main findings?
The assessment showed that some Financial Intelligence Units failed to engage in a meaningful dialogue by giving quality feedback to obliged entities defined by the fifth Anti-money laundering directive. The lack of templates for reporting also hampers the quality of the reports by obliged entities. Several Financial Intelligence Units do not fully comply with their obligation to exchange information with other Financial Intelligence Units. The recurrent technical difficulties in the functioning of the seem to have been an important factor in these difficulties. The report also shows a need for a stronger mechanism to coordinate and support cross-border cooperation and analysis. The unregulated information exchange between Member States’ FIUs and the FIUs of third countries led to a different approaches to such exchanges.

4. Interconnection of central bank account registries

What is this report about?
The fifth Anti-Money Laundering Directive mandated the Commission to submit a report to the European Parliament on this issue. In this report the Commission assesses the conditions, technical specifications and procedures for ensuring a secure and efficient interconnection of the centralised bank account registries or data retrieval systems. Looking at the various IT solutions ensuring the EU-wide decentralised interconnection of national electronic databases, already operational or being currently under development, this report delivers a short factual analysis of the available technical options, highlighting their benefits or drawbacks. The report also identifies where one or another option is most suitable for a possible future interconnection of the national bank account registries. The report will inform EU decision makers about a future interconnection project. It is a legal basis for the establishment of an EU-wide interconnection.

What are the national central bank account registries?
Article 32a of the fourth Anti-Money Laundering Directive requires Member States to put in place by 10 September 2020 national centralised electronic automated mechanisms which allow for the identification of any natural or legal persons holding or controlling in their respective territories payments accounts, bank accounts and safe deposit boxes. These mechanisms may be established either as a central registry, whereby all relevant information are stored in one system, or as a data retrieval system, whereby a central IT platform reaches out to the bank account information held in the different underlying databases of the financial institutions. For the time being, 15 Member States have in place already central bank account registries or electronic data retrieval systems on bank accounts.

Who has access to the information in the central bank account registries?
EU legislation defines the authorities that should have direct access to the information held by the central automated mechanisms, which are the Financial Intelligence Units (FIUs). The Directive also allows Member States to give access to other authorities with tasks on preventing and combatting money laundering and terrorist financing. In addition, Directive (EU) 2019/1153 on the access to financial and other information provides that law enforcement authorities competent for combatting serious crime shall also have direct and immediate access to the national central bank account registries for the purposes of fighting serious crime.

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