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Directive 2005/60/EC on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing is currently one of the main instruments which regulates efforts to combat money laundering (and terrorist financing) in the European Union. Respecting national procedural autonomy, this directive leaves a high degree of freedom for the Member States in designing their own supervisory architectures under the preventive anti-money laundering policy. This contribution adopts a systematic approach to the institutional differences between the EU Member States and presents four models of supervision that are currently present in the European Union. It explains the main characteristics of these models, categories the EU Member States accordingly and analyses the potential strengths and weaknesses of each model, thereby providing a first indication of their effectiveness.
Money laundering is criminalised virtually all around the world and has been a law enforcement priority since the early 1990s. The international nature of money laundering, combined with estimations on the scope and the distorting effects it may bring about, make it a grave danger to society due to its strong interaction with organised drugs and white-collar crime. Over the years a 'twin-track approach'has been developed, aiming at the prevention of money laundering on the one hand, and punishing the money launderers on the other. This publication analyses the effectiveness of the anti-money laundering supervision of banks, real estate agents and accountants in the Netherlands, Spain and the UK. It thoroughly analyses the legislation, the institutional settings and competences of anti-money laundering supervisors, as well as the application of these competences in practice. Based on this analysis, a number of recommendations for the EU legislators and the national legislators are formulated in order to strengthen and increase the effectiveness of anti-money laundering supervision.
This book introduces and contextualizes the revised and strengthened legislation on the laundering of criminal funds mandated by the European Union on the 20th May 2015. The authors provide fresh and new insight into the EU’s fourth directive 2015/849, with a specific focus on topics such as: beneficial ownership and effective transparency, the risk-based approach, the issue of supervision of payment institutions that operate across borders by agents, the new method of risk assessment, tax crimes inclusion in “criminal activity” definition, and the effects of new rules on the gambling sector. The authors present the new laws in the context of their legal genealogy and demonstrate the benefits they bring in raising the standards for anti-money laundering regulation and counter-terrorism financing. The book’s comprehensive exploration of this new legislation will appeal to policy-makers, students and academics hoping to understand the changes more clearly.
Efforts to launder money and finance terrorism have been evolving rapidly in recent years in response to heightened countermeasures. The international community has witnessed the use of increasingly sophisticated methods to move illicit funds through financial systems across the globe and has acknowledged the need for improved multilateral cooperation to fight these criminal activities. The World Bank and International Monetary Fund have developed this guide to help countries understand the new international standards. It will hopefully serve as a comprehensive source of practical information for countries to fight money laundering and terrorist financing. It discusses the problems caused by these crimes, the specific actions countries need to take to address them, and the role international organizations, such as the Bank and the IMF, play in the process. This guide is a tool for countries to establish and improve their legal and institutional frameworks and their preventive measures according to international standards and best practices. -- From Foreword (p. ix).
This article presents an analysis of how legislators on international, European and national level combat the financing of terrorism. The central question in this article is whether European regulations concerning the prevention of money laundering and the financing of terrorism, are effective, proportional and mutually harmonious. Now that many regulations in this field have been established by intra-national bodies, it is important to examine how these regulations are further elaborated in the respective national systems. This article gives a broad overview of legislative initiatives of the UN, USA, FATF, EU and Council of Europe. The Netherlands for numerous reasons serves as a legal example. It is concluded that measures taken or proposed to avoid or at least reduce the financing of terrorism are quite effective to prevent abuse of the financial system. On the other hand, these measures increase the risk of underground or illegal financing, which is even more difficult to control.
Money laundering and terrorist financing (ML/TF) harm society in a number of ways. Money laundering facilitates and perpetuates crime and supports criminals. Terrorist financing facilitates the commitment of atrocities at home and abroad. Together, they undermine the trust of citizens in financial institutions, negatively affect market integrity and threaten the stability of the financial system. ML/TF cannot be fought in isolation. Governments, public authorities and the private sector all have a role to play. Since its inception, the EBA has been working to foster a common approach by national competent authorities and financial institutions across the single market to anti-money laundering and countering the financing of terrorism (AML/ CFT), and to equip them to apply this approach effectively. A common approach is important, because financial crime respects no borders and a weakness in one area of the single market opens up the entire single market to abuse. The high-profile scandals of the last few years have shown that, collectively, we must strengthen Europe's AML/CFT defences. This is why the European legislature gave the EBA new powers to lead, coordinate and monitor EU supervisors' fight against ML/TF. It also gave us a new objective, to prevent the use of the financial system for the purposes of money laundering and terrorist financing. We will use all of our powers and functions to fulfil our AML/CFT objective. We will lead the development of EU-wide AML/CFT policies and standards within our mandate, monitor risks to the integrity of the single market and coordinate supervisory actions at Union level to ensure that financial institutions apply effective and robust AML/CFT controls wherever they operate in the single market. We aim to make a real difference in the fight against financial crime.
"Money laundering and terrorist financing are serious crimes that affect not only those persons directly involved, but the economy as a whole. According to international standards, every bank has the obligation to know its customers and to report suspicious transactions. Although these obligations sound straightforward, they have proved challenging to implement. What information precisely has to be gathered? How should it be recorded? If and when does one have to file a suspicious transaction report? It is here that a supervisor can play a crucial role in helping supervised institutions; first, in understanding the full extent of the obligations of Customer Due Diligence and Suspicious Transaction Reports (STR) and, second, in ensuring that those obligations are not just words on paper but are applied in practice. Effective supervision is key to the success of a country's AML/CFT system. In this regard, field work in both developed and developing countries has shown an overall low compliance in the area of supervision of banks and other financial institutions; supervisory compliance is indeed generally lower than the average level of compliance with all Financial Action Task Force recommendations. As a result, by providing examples of good practices, this book aims to help countries better conform to international standards. In this regard, this handbook is specifically designed for bank supervisors.
Over the past decade and beyond, the need for a modern anti-money-laundering strategy has become widely accepted internationally. Depriving criminal elements of the proceeds of their crimes has increasingly been seen as an important tool to combat drug trafficking and, more recently, as a critical element in fighting organized crime, corruption, and the financing of terrorism, and maintaining the integrity of financial markets. The first few financial intelligence units (FIUs) were established in the early 1990s in response to the need for countries to have a central agency to receive, analyze, and disseminate financial information to combat money laundering. Over the ensuing period, the number of FIUs has continued to increase, reaching 84 in 2003. This handbook responds to the need for information on FIUs. It provides references to the appropriate Financial ActionTask Force (FATF) standards wherever appropriate.
Macro statistics on foreign direct investment (FDI) are blurred by offshore centers with enormous inward and outward investment positions. This paper uses several new data sources, both macro and micro, to estimate the global FDI network while disentangling real investment and phantom investment and allocating real investment to ultimate investor economies. We find that phantom investment into corporate shells with no substance and no real links to the local economy may account for almost 40 percent of global FDI. Ignoring phantom investment and allocating real investment to ultimate investors increases the explanatory power of standard gravity variables by around 25 percent.
Gibraltar’s Detailed Assessment Report on Anti-Money Laundering (AML) and Combating the Financing of Terrorism is reviewed. The principal AML risk to Gibraltar is lodged in its professional sector, which is likely to be involved in the layering and integration of proceeds of crime. There is also some risk to Gibraltar at the placement stage, in connection with drug trafficking, migrant smuggling, and organized crime in southern Spain. The Financial Services Commission in Gibraltar has established a strong, risk-based framework for financial institutions for AML.