The European Union (EU) Permanent Representatives Committee (Coreper) has agreed on behalf of the Council of the EU (Council) a negotiating mandate on new rules to fight money laundering and terrorist financing.
This agreement follows the completion of a first reading in the European Parliament (EP) on 11 March 2014 of the European Commission (EC) proposed anti-money laundering package, and paves the way for the start of trilogues between the EP, the Council and the EC.
The EC proposals, adopted in February 2013, consist of:
- A directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, the so-called Fourth Anti-Money Laundering Directive (4th AML) which would extend the scope of the existing 3rd AML.
- A regulation on information accompanying transfers of funds to secure ‘due traceability’ of these transfers.
The EC proposals built on the 2012 recommendations of the Financial Action Task Force (FATF), a 34-member body established by the G7 and regarded as the world anti-money laundering body.
The main modifications involve including a greater number and type of businesses under the legislation, a requirement for evidence-based measures and the provision of guidance by the European supervisory authorities, as well as tighter rules on customer due diligence.
The proposals also require unrestricted access to beneficial ownership information for competent authorities.
The Association of Chartered Certified Accountants (ACCA) welcomed Coreper’s agreement and said transparency is the corner stone to effectively fight money laundering and terrorist financing.
ACCA head of technical John Davies said the new requirement for companies to record and make available details of their beneficial ownership will be of "high importance for financial services sector, but also accountants in public practice and insolvency practitioners".
"This will be of to them in their efforts to identify the beneficial owners of companies and trusts with whom they enter into business relationships," he continued. "Being active players in helping to fight money laundering, auditors, external accountants and tax advisors are obliged to comply with a number of provisions, in particular customer due diligence measures, reporting and record keeping obligations, establishing internal procedures as well as raising awareness, training and supervising their staff.’
EU Internal Market Commissioner Michel Barnier also welcomed Coreper’s agreement by saying: "Europe must lead by example by putting in place a framework which focuses on greater effectiveness and improved transparency in order to make it harder for criminals to abuse the financial system."
"Enhancing beneficial ownership transparency has been at the heart of the international agenda and I particularly welcome the ambition of both the parliament and member states to introduce new investigative tools," he continued.