EU putting a stranglehold on dirty money

Money-laundering is at the heart of practically all criminal activity. It has being given strategic priority at European Union (EU) level. A decision was adopted by the EU Council of ministers concerning arrangements for cooperation between financial intelligence units of the member states. The Europol convention was extended to money laundering in general, not just drugs related. A framework decision on money laundering, dealing with the identification, tracing, freezing and confiscation of criminal assets and the proceeds of crime has also been adopted. The EU member states have signed the protocol to the convention on mutual assistance in criminal matters between the member states. A second anti-money laundering directive was agreed, widening the definition of criminal activity giving rise to money laundering to include all serious crimes, including offences related to terrorism. A framework decision is pending on the execution in the EU of orders freezing property or evidence, the scope of which is to be extended to terrorist-related crimes.

Money-laundering is the process by which criminal proceeds are 'cleaned' so that their illegal origins are hidden. It is the way crime disguises its activity, by processing its dirty money. Although it is not possible to measure in the same way as legitimate economic activity; the scale of the problem is considered to be enormous. The International Monetary Fund has estimated that the aggregate size of money-laundering is anywhere between 2 and 5 % of the world's gross domestic product.

What is being done at EU level to combat money-laundering?

Evidence of the EU's determination to tackle money-laundering is clear. The Tampere European Council in October 1999 stated "Money laundering is at the very heart of organised crime. It shoule be rooted out whereever it occurs. The European Council is determined to ensure that concrete steps are taken to trace, freeze, seize and confiscate the proceeds of crime." Further proof was demonstrated by the first ever joint EU Council of Finance and Justice and Home Affairs Ministers in October 2000.

Measures adopted to combat money laundering include the EU Council of Ministers' decision of October 2000 concerning arrangements for cooperation between financial intelligence units (FIUs) of the Member States and a Council Act of November 2000 amending the terms of the Europol Convention to extend the competence of Europol to money-laundering in general, not just drugs-related money-laundering.

In addition, a framework decision on money laundering, dealing with the identification, tracing, freezing and confiscation of criminal assets and the proceeds of crime was adopted in 2001, and the Commission has presented in April 04 a first report on the measures taken by Member States to comply with this instrument. At a subsequent joint EU Council of Finance and Justice and Home Affairs Ministers held in October 2001, Member States signed the protocol to the Convention of 29 May 2000 on Mutual Assistance in Criminal Matters between the Member States. The protocol represents an important improvement of the cooperation between Member States in fighting economic and financial crime.

A second anti-money laundering Directive was agreed in December 2001. It amends the earlier 1991 Directive in two main respects. First, it widens the definition of criminal activity giving rise to money laundering to include all serious crimes, including offences related to terrorism. Second it applies to activities and professions beyond credit and financial institutions (which were covered by the 1991 Directive) such as accountants, lawyers, notaries, real estate agents, casinos and dealers in high value goods. They are now subject to the same obligations as regards customer identification, record keeping and reporting of suspicious transactions.

In the light of the recent terrorist events in September 2001, the joint Council reaffirmed its firm intention to adopt the draft framework decision on the execution in the EU of orders freezing property or evidence, the scope of which is to be extended to terrorist-related crimes.

All of this builds on earlier work, such as that which led to the 1995 Convention on the Protection of the Financial Interests of the European Communities and to a number of joint actions on aspects of money-laundering.

More generally, the European Commission is a member of the Financial Action Task Force and participates fully in international bodies such as the OECD and the Council of Europe. The Commission has also negotiated on behalf of the EU in respect of the relevant money-laundering provisions of the United Nations Convention on Transnational Organised Crime.

How is banking secrecy being tackled?

The removal of banking secrecy provisions, in appropriate circumstances, is vital in order to combat money laundering. In October 2000, the EU Council of Ministers reaffirmed its position that fiscal and banking secrecy should not provide barriers to investigations on money-laundering and international cooperation. A Protocol to the EU Mutual legal Assistance Convention now ensures that banking secrecy provisions are not invoked as a reason to refuse a request for assistance from another Member State.

What are the EU Member States doing to track down the proceeds of crime?

EU governments have decided that one of the best ways to tackle organised crime is to give a much higher priority to tracking and confiscating the proceeds of any illegal activity or crime. Money is crimees lifeblood. Criminal organisations exist to make money. If a particular criminal activity ceases to be profitable, the criminals may turn their attentions elsewhere. They might even decide that crime is not worthwhile.