Tag Archives: Money laundering

Mutual administrative assistance in the fight against fraud

Mutual administrative assistance in the fight against fraud

Outline of the Community (European Union) legislation about Mutual administrative assistance in the fight against fraud

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Budget

Mutual administrative assistance in the fight against fraud

Proposal

Amended proposed regulation of the European Parliament and of the Council of 14 September 2006 relating to mutual administrative assistance to protect the financial interests of the Community against fraud and any other illegal activities (presented by the Commission under Article 250 (2) of the EC Treaty).

Summary

This proposed regulation is intended to fight fraud and any other illegal activities which harm the financial interests of the Community. For this to happen, the Member States and the Commission need to cooperate and exchange information, particularly in the areas of money laundering, VAT fraud and Community expenditure. This proposed regulation therefore establishes the Community framework for mutual administrative assistance.

The Commission emphasises that it offers its assistance to Member States but that this regulation does not give it any investigative powers.

The regulation applies only to fraud cases or any other illegal activities which are of particular importance at Community level. The cases must therefore have an impact in other Member States or connections with other Member States and must exceed certain levels of financial loss.

Competent authorities

The competent authorities to obtain information are the Commission, including OLAF and the public authorities of the Member States which are:

  • responsible for managing funds originating from the Community budget; or
  • responsible for fighting fraud and any other illegal activities which harm the financial interests of the Community; or
  • the central liaison offices and liaison departments and other investigating authorities competent to deal with VAT fraud; or
  • financial information units responsible for gathering and analysing information received concerning money laundering.

Difference in status between the competent authorities of the Member States must not hinder their cooperation.

Assistance on request

On request, the competent authorities will assist one another. The authority receiving the request * must send the requesting authority * any information that is relevant for the prevention and detection of irregularities *, as well as financial information * relating to those irregularities. It has six weeks within which to send the information requested. The deadline is four weeks when it is already in possession of the information when it receives the request. If the requesting authority asks it to do so, the authority receiving the request must carry out or arrange for the administrative investigations to be carried out * regarding any operations which could constitute an irregularity.

An officer of a competent authority may carry out his activities in another Member State and obtain information at the offices of the authority to which the request is made.

The Commission may be granted access to the information from the Member States by means of the system for exchanging information on VAT.

Spontaneous assistance

Member States must supply the Commission spontaneously, in other words without a prior request on its part, with any useful information relating to fraud or other irregularities, as well as financial information about such irregularities.

The competent authorities and the Commission send general information to one another in order to improve the legislation in the fight against fraud. This information covers, for example, the new methods used to commit irregularities, as well as the detection and prevention of irregularities.

For its part, the Commission analyses the information gathered and sends the results of its analysis to the Member States.

Using the information

Every item of information communicated may have a number of uses, including the following:

  • to serve as evidence in each Member State’s administrative or judicial proceedings. The Commission must be kept informed of progress in administrative or judicial enquiries, investigations and proceedings resulting from mutual assistance under this regulation;
  • to be disclosed to a third country, under certain circumstances, and with the agreement of the authorities from whom the information originated. Additionally, information disclosed by a third country must be sent to the competent authorities of the Member States and the Commission, which therefore performs a coordinating function;
  • to be the subject of risk analysis by the Commission.

Only information used to fight fraud and other irregularities can be exchanged. The sending of information must comply with the rules governing confidentiality, such as professional secrecy and data of a personal nature.

Strengthening the possibility of recovery

To facilitate the recovery of debts resulting from irregularities, the authority receiving the request must gather any relevant financial information from banks, financial establishments and the following legal entities or natural persons, in the performance of their professional activities:

  • auditors, external accountants and tax advisers;
  • notaries and other member of independent legal professions;
  • persons providing services to companies who are not covered by the above two items;
  • estate agents;
  • other natural persons or legal entities who deal in assets, where payments are made in cash for a minimum sum of fifteen thousand euro;
  • casinos.

Member States must take the necessary steps to recover benefits illegally obtained from irregularities. Recovery relates to sums of a minimum of fifty thousand euro.

Final provisions

The competent authorities have the option not to cooperate for reasons of public policy.

Enforcement measures are provided for the purposes of the implementation of this regulation and will be adopted by the Commission in accordance with the comitology procedure. The Commission will thus be assisted by a regulatory committee.

Context

On 20 July 2004, the Commission submitted a first proposed regulation on mutual assistance against fraud [COM(2004) 509 final]. This proposal amends the initial proposal and includes some amendments made by the European Parliament

Key Terms Used In The Act

  • Authority receiving the request: a competent authority to which a request for mutual assistance is sent.
  • Requesting authority: a competent authority which makes a request for assistance.
  • Irregularity: the concept of irregularity covers practices harmful to the financial interests of the Community and also extends to money laundering and VAT fraud.
  • Financial information: any information relating to suspect transactions received by the competent national contacts and any other information relevant to the detection of financial transactions connected with the irregularities covered by this regulation.
  • Administrative investigation: all checks, verifications and actions carried out by the competent authorities in the performance of their duties in order to determine whether irregularities have been committed, except for actions undertaken at the request or under the direct control of a judicial authority.

References And Procedure

Proposal Official Journal Procedure
COM(2006) 473 COD/2004/0172

 

Information on the payer accompanying transfers of funds

Information on the payer accompanying transfers of funds

Outline of the Community (European Union) legislation about Information on the payer accompanying transfers of funds

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Single market for capital

Information on the payer accompanying transfers of funds

Document or Iniciative

Regulation (EC) No 1781/2006 of the European Parliament and of the Council dated 15 November 2006 on information on the payer accompanying transfers of funds * .

Summary

This Regulation lays down rules aimed at establishing the traceability of transfers of funds *. These rules will be applicable to all payment service providers (PSP) involved in the payment chain. The This Regulation aims to transpose into Community legislation Special Recommendation VII on “wire transfers” (SR VII) of the Financial Action Task Force (FATF *).

The Regulation does not apply to transfers of funds * which flow from a commercial transaction carried out using a credit or debit card or any other similar payment instrument, provided that a unique identifier allowing the transaction to be traced back to the payer accompanies all transfers of funds flowing from that commercial transaction and that the beneficiary has entered into agreement with the payment service provider enabling the payment of the provision of goods and services.

Furthermore, under the same conditions as the previous point, this regulation does not apply to transfers of funds carried out via a mobile telephone or any other digital device or linked to IT, when the payments are post paid and insofar as the payment service provider must comply with obligations stated by Directive 2005/60/EC.

In addition, the Regulation will not apply to transfers of funds where both the payer * and the payee * are payment service providers acting on their own behalf.

Under the Regulation, the payer’s payment service provider * (PSP) must ensure that transfers of funds contain complete, accurate and meaningful information on the payer. Any intermediary PSP must also ensure that all information on the payer that accompanies a transfer is transferred with it or retained in an appropriate manner.

In turn, any payment service provider * of the payer must report suspicious transactions to the authorities responsible for combating money laundering and terrorist financing. The payee’s PSP must be able to detect a lack of presence of information on the payer when receiving transfers and must take appropriate steps to correct this situation (refuse the transfer or ask for further information) so that received transfers of funds do not remain anonymous.

Accordingly, the name, address and account number of the person ordering the payment must always accompany the transfer. Access to this information will be granted to the competent authorities only for the purposes of preventing, investigating, detecting and prosecuting money laundering or terrorist financing.

An open consultation exercise on this Regulation was conducted online between 2 December 2003 and 15 February 2004. The Commission received 103 replies. The results are available on the website of the Directorate-General for the Internal Market.

Context: combating terrorist financing

In the European Union’s revised Plan of Action to Combat Terrorism (PDF ) of 18 June 2004, the Council emphasised the importance of adopting measures designed to prevent the phenomenon of terrorist financing. The European Council of 25 March 2004 called on the Member States “to increase cooperation between national competent authorities, financial intelligence units and private financial institutions to facilitate improved exchange of information on terrorist financing”.

In that same statement, the Council also asked the Commission to consider improvements on the regulation and transparency of non-profit bodies so as to prevent them from being used by terrorists to acquire funding for their activities.

For its part, the Commission adopted a communicationon prevention in this field in October 2004 and unveiled in December of that year the Union’s strategy for combating terrorist financing. This document, drawn up on the basis of the proposals made jointly by the Commission and the Secretary-General High Representative, takes stock of measures implemented in this field and contains a list of recommendations for strengthening action by the Union.

Key terms used in the act
  • “Payee”: A natural or legal person who is the intended final recipient of transferred funds.
  • “Payer”: a natural or legal person who is the account holder and who allows a transfer of funds to leave the aforementioned account, or in the absence of an account, the natural or legal person who gives the order to carry out a transfer of funds.
  • FAFT: The intergovernmental body responsible for designing and promoting, at both national and international level, strategies to combat money laundering and terrorism financing.
  • “Payment service provider” (PSP): A natural or legal person whose business includes the provision of fund transfer services.
  • “Intermediary payment service provider”: A payment service provider which is neither that of the payer nor that of the payee and which participates in the execution of transfers of funds.
  • “Transfer of funds”: Any transaction carried out on behalf of a payer through a payment service provider by electronic means with a view to making funds available to a payee at another payment service provider, irrespective of whether the payer and the payee are the same person.

References

Act Entry into force – Date of expiry Deadline for transposition in the Member States Official Journal
Regulation on information on the payer accompanying transfers of funds 1.1.07 OJ L 345 of 8 December 2006

Related Acts

Directive 2005/60/EC of the European Parliament and of the Council on 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing [Official Journal L 309 of 25.11.2005].

Commission Communication to the Council, the European Parliament and the European Economic and Social Committee – The prevention of and fight against terrorist financing through enhanced national high-level coordination and greater transparency of the non-profit sector

COM(2005) 620 final

– Official Journal C 122, 23.5.2006].

Communication from the Commission to the Council and the European Parliament of 20 October 2004 on the prevention of and the fight against terrorist financing through measures to improve the exchange of information, to strengthen transparency and to enhance the traceability of financial transactions

COM(2004) 700 final

– Not published in the Official Journal].

Communication from the Commission to the Council and the European Parliament of 20 October 2004 – Prevention, preparedness and response to terrorist attacks

COM(2004) 698 final

– Not published in the Official Journal].

Council Regulation (EC) No

2580/2001

of 27 December 2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism [Official Journal L 344 of 28.12.2001].

Directive

97/5/EC
(BG) (CS) (ET) (GA) (LV) (LT) (HU) (MT) (PL) (RO) (SK) (SL)
of the European Parliament and of the Council of 27 January 1997 on cross-border credit transfers [Official Journal L 43 of 14.2.1997].

Money laundering: prevention of the use of the financial system

Money laundering: prevention of the use of the financial system

Outline of the Community (European Union) legislation about Money laundering: prevention of the use of the financial system

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Single market for capital

Money laundering: prevention of the use of the financial system

Document or Iniciative

Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing [See amending act(s)].

Summary

This directive sets out to prevent the financial system from being used for money laundering and terrorist financing, and repeals Directive 91/308/EEC.

European Union (EU) countries must prohibit money laundering and the financing of terrorism. To this end, they may adopt or retain in force stricter provisions than provided for in this directive.

Definition of money laundering and the financing of terrorism

The directive describes money laundering as the following conduct, when committed intentionally:

  • the conversion or transfer of property derived from criminal activity to conceal or disguise its illicit origin;
  • the concealment or disguise of the true nature, source, location, disposition, movement or ownership of property known to have been derived from criminal activity;
  • the acquisition, possession or use of property known to have been derived from criminal activity;
  • the participation, or assistance, in the commission of any of the activities above.

Money laundering must be regarded as such even if the activities that generated the laundered property were carried out in another EU or non-EU country.

By “terrorist financing” the directive means the provision or collection of funds to carry out any of the offences defined in Council Framework Decision 2002/475/JHA on combating terrorism, such as hostage taking, the drawing-up of false administrative documents and the leadership of a terrorist group.

Obligations of covered entities and persons vis-à-vis their customers

The directive applies to credit and financial institutions, independent legal professions, notaries, accountants, auditors, tax advisors, real estate agents, casinos, trust and company service providers, and all providers of goods (when payments are made in cash in excess of 15 000 EUR). The entities and persons covered by the directive are required to apply customer due diligence measures when establishing a business relationship and when carrying out occasional transactions amounting to EUR 15 000 or more. Furthermore, they must file a suspicious transaction report when there is suspicion of money laundering or terrorist financing, regardless of any exemption or threshold.

These diligence measures involve identifying the customer and verifying his/her identity, obtaining information on the purpose and intended nature of the business relationship and, where appropriate, identifying and verifying the identity of the natural person owning or controlling the customer or on whose behalf the activity is carried out. The extent of such measures may be determined on a risk-based approach depending, for example, on the type of customer or business relationship. EU countries may allow the entities and persons covered by the directive to call on third parties to execute the customer due diligence measures. The directive also lists cases in which simplified customer due diligence measures may be used, such as in relation to national public authorities, customers with life insurance policies with an annual premium of no more than EUR 1 000 or electronic money holders.

Where there is a high risk of money laundering or terrorist financing, the entities and persons covered by the directive are required to apply enhanced customer due diligence. Enhanced customer due diligence involves supplementary measures to verify or certify the documents supplied when the customer has not been physically present for identification purposes.

Finally, credit and other financial institutions may not keep anonymous accounts or anonymous passbooks.

European countries are required to inform each other and the European Supervisory Authorities (ESA), namely the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA) where they believe that a third country meets the equivalence conditions concerning the assessment of situations which represent a low risk of money laundering and terrorist financing.

Establishment of a financial intelligence unit (FIU) in the EU countries

Each EU country must set up a financial intelligence unit (FIU) in the form of a central national unit. These units are responsible for receiving, requesting, analysing and disseminating to the competent authorities information concerning potential money laundering or terrorist financing. EU countries must provide their FIU with adequate resources to fulfil its tasks and ensure that it has access to any necessary financial, administrative and law enforcement information.

The entities and persons covered by the directive must file a suspicious transaction report without delay to the FIU when they know or suspect that money laundering or terrorist financing is being or has been committed or attempted. In the meantime, they must refrain from carrying out transactions. At the FIU’s request, these entities and persons must furnish all necessary information in accordance with the applicable legislation.

EU countries may decide whether they require independent legal professions, notaries, auditors, external accountants and tax advisers to inform the FIU of information they receive from or obtain on their clients when ascertaining the legal position of their client or when defending or representing that client in judicial proceedings.

The entities and persons covered by this directive may not reveal to the customer or to other third persons that information has been transmitted to the FIU, except in the case of law enforcement. They must keep documents and supporting or other evidence for at least five years from the end of the business relationship or the carrying-out of the transaction. The Commission promotes coordination between the EU countries’ FIUs.

Member States are required to inform each other and the EAS where they believe that a third country meets the equivalence conditions concerning the prohibition of disclosure, professional secrecy and personal data protection.

The credit institutions and other financial institutions covered by this Directive shall apply in their branches and majority-owned subsidiaries located in third countries measures at least equivalent to those laid down in this Directive with regard to customer due diligence and record keeping. Member States, the EAS and the Commission are required to inform each other where the legislation of a third country does not permit the application of these measures and coordinated action could be taken to find a solution. In this case, the EAS have the option of drawing up draft regulatory technical standards to specify the type of additional measures and minimum action to be taken by credit and financial institutions.

Enforcement of the directive and imposition of sanctions

The entities and persons covered by the directive must establish appropriate measures and procedures for customer due diligence, reporting of information, record keeping, risk management and communication. They must ensure that the relevant employees are aware of the provisions in force.

EU countries must monitor compliance with the directive. The entities and persons concerned must be held liable for any failure to comply with the national provisions adopted pursuant to the directive. The penalties must be effective, proportionate and dissuasive.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Directive 2005/60/EC

15.12.2005

15.12.2007

OJ L 309, 25.11.2005

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal

Directive 2007/64/EC

25.12.2007

1.11.2009

OJ L 319, 5.12.2007

Directive 2008/20/EC

20.3.2008

OJ L 76, 19.3.2007

Directive 2009/110/EC

30.10.2009

30.4.2011

OJ L 267, 10.10.2009

Directive 2010/78/EU

4.1.2011

31.12.2011

OJ L 331, 15.12.2010

The successive amendments and corrections to Directive 2005/60/EC have been incorporated into the original text. This consolidated versionis of documentary value only.

Related Acts

Commission Directive 2006/70/EC of 1 August 2006 laying down implementing measures for Directive 2005/60/EC of the European Parliament and of the Council as regards the definition of “politically exposed person” and the technical criteria for simplified customer due diligence procedures and for exemption on grounds of a financial activity conducted on an occasional or very limited basis [Official Journal L 214 of 4.8.2006].
This directive contains the technical aspects of the definitions given in Directive 2005/60/EC, including that of “politically exposed person” (heads of state, heads of government, ministers, members of parliament, etc.).

The prevention of and fight against organised crime in the financial sector

The prevention of and fight against organised crime in the financial sector

Outline of the Community (European Union) legislation about The prevention of and fight against organised crime in the financial sector

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Single market for capital

The prevention of and fight against organised crime in the financial sector

Proposal

Communication from the Commission to the Council and the European Parliament on the prevention of and fight against organised crime in the financial sector [COM(2004) 262 final – Not published in the Official Journal].

Summary

The European Commission intends to develop and enhance a series of measures to prevent and fight either organised financial crime or general organised crime which influences organised financial crime.

Money laundering

The fight against money laundering has been a top political priority of the European Union (EU) for a number of years. The need to protect the financial system from misuse and the fear that the application of radically different measures in this area could prejudice the proper functioning of the Internal Market provided the European Commission with the legal basis under the Treaty for proposing Community legislation. Current legislation is basically composed of two Community Directives adopted in 1991 and 2001.

The Commission has announced its intention of tabling a proposal for a third Directive determining the changes to be made to the 1991 and 2001 Directives needed to take account of the revised 40 FATF Recommendations.

The Commission has already presented a proposal for a Regulation on the prevention of money laundering by means of customs cooperation. The proposal aims to set up a uniform approach to cash control based on a declaration system for amounts greater than EUR 15 000. It supplements the money-laundering Directives which govern, inter alia, the control of financial resources moving via financial institutions. There is indeed a risk that this control mechanism could be undermined by large-scale movements of cash which are not uniformly subject to control in the Community.

The Commission also proposes:

  • case tracking: Member States are encouraged to develop systems capable of tracking data provided by entities subject to reporting requirements;
  • the establishment of asset recovery bodies at national level: the Commission supports Europol’s efforts to set up an “Asset Seizure Knowledge Centre” to facilitate the identification of criminal assets in the course of major criminal investigations conducted by Member States;
  • criminalising gross negligence resulting in a failure to comply with reporting obligations;
  • a study on the feasibility of Member States’ establishing a database of currency exchange transactions which could be accessed by police and judicial authorities in money-laundering investigations;
  • giving consideration to an appropriate mechanism to facilitate an EU-wide response where financial havens are considered to represent a significant money laundering threat;
  • promoting rapid information exchange between law enforcement, FIUs and other organisations concerned with a view to detecting underground bank transactions, which generally leave no paper trail;
  • reinforcing Europol’s anti-money-laundering efforts by implementing the computerised evaluation of the Suspicious Transaction Reports sent to their analysis system (SUSTRANS);
  • pursuing the FIU-NET project, which aims to link up financial intelligence units.

Fraud

Non-cash means of payment represent an important source of illicit revenue for organised crime groups through fraud and counterfeiting.

The Commission will:

  • publish in 2004 a report on progress achieved under the three-year Action Plan to prevent fraud. This plan was adopted in 2001 and aims to foster a more coherent approach to prevention in this field;
  • propose further initiatives. In particular, it will explore the possibility of drafting clear guidelines as to how public and private agencies may work together to combat fraud more effectively.

In addition to what has recently been achieved in this field, there is a need to explore the establishment of a common and comprehensive EC concept of fiscal fraud and the harmonisation of penal sanctions. The Commission intends to launch a comparative study of the respective definitions of fiscal fraud and their penal consequences.

Fraud affecting the financial interests of the Community also represents an important source of illicit revenue. The Community’s own resources suffer huge losses as a result. To combat this problem, the Commission recommends:

  • enhanced cooperation between Member States, the Commission (OLAF), Eurojust and possibly Europol;
  • the creation of an independent European Public Prosecutor responsible for detecting and prosecuting offences directed against the Community’s financial interests.

Transparency of certain legal entities

There is a general need to enhance transparency and integrity standards in public administrations and private entities to prevent and discourage financial crime in general and thus contribute to the more effective tracing of organised financial crime.

The Commission proposes:

  • speeding up work on the role of independent non-executive or supervisory directors;
  • carrying out cost benefit analyses in connection with the enhancement of transparency measures to help combat organised financial crime;
  • exploring new ways of preventing and combating financial malpractice, with a particular focus, inter alia, on companies’ use of complex and opaque structures, subsidiaries and other special-purpose vehicles to commit and to conceal malpractices in the financial and taxation fields. One of the objectives could be to recommend a comprehensive and consistent EU approach for tackling such malpractices.

The Commission also intends to promote:

  • the development of cooperation between the private and public sectors, not only via the EU Forum for the Prevention of Organised Crime but also by encouraging greater research work in this area. It will also explore the scope for coordination between law enforcement/government officials and representatives of the financial and other business communities affected by organised financial crime.
  • the elaboration of a common policy on the development and implementation of financial investigations as an investigative technique. Standard rules for financial investigation bodies throughout the EU should also be considered, notably in connection with funding, training requirements and cooperation mechanisms of such bodies;
  • the setting of minimum standards for national criminal intelligence systems, in order to facilitate effective strategic and tactical analysis, forward planning and operations. To this end, the Commission proposes setting up a working group of representatives of the European Commission (including OLAF), Europol and Eurojust;
  • relevant data collection and statistical mechanisms with particular regard to organised financial crime;
  • further work on a mechanism to facilitate identification of legislative proposals which may inadvertently create opportunities for crime. At a subsequent stage, the Commission may if need be extend this form of crime risk assessment to areas beyond the legislative process. This could include procedures and processes surrounding such areas as insurance claim forms or credit card applications with a view to reducing opportunities for fraud;
  • a full evaluation of the effectiveness and impact of policy and measures in the fight against organised financial crime in the EU in 2005. The purpose of these evaluation missions will be to identify best practice and areas where additional measures in the fight against organised financial crime could be taken;
  • continued seminars, workshops and studies under its AGIS funding programme;
  • enhancing external action in the fight against organised financial crime, via technical assistance programmes for third countries and by entering into agreements with them (such as the agreement on mutual legal assistance in criminal justice concluded with the United States on 25 June 2003).

Background

This Communication addresses the problem of organised crime in the financial sector. The focus is therefore on non-violent crime generally involving abuse of financial and/or payment systems and resulting in illicit financial gain.

The European Commission sees the fight against organised financial crime as a core priority over the coming years, as financial crime is often wrongly perceived as a “victimless” crime. While organised financial crime may not always impact directly on individuals, the reality is that its broader social impact is considerable in terms of lost revenues, loss of reputation and the fall in public standards.

Fighting corruption

Fighting corruption

Outline of the Community (European Union) legislation about Fighting corruption

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Fight against fraud > Fight against corruption

Fighting corruption

Document or Iniciative

Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee of 6 June 2011 – Fighting corruption in the EU [COM (2011) 308 final – Not published in the Official Journal].

Summary

Corruption affects all countries of the European Union (EU) to various degrees. Corruption is harmful, not only financially but also socially, because it is often used to mask other serious crimes such as trafficking in drugs or human beings. In addition, it can weaken citizens’ trust in democratic institutions and their political leaders.

Several anti-corruption instruments exist at international and EU level, but their implementation by Member States remains uneven.

In order to strengthen the political will, in all Member States, to tackle this problem, the Commission announces the setting up of an Anti-Corruption Report and calls on EU countries to implement the existing anti-corruption instruments more effectively. It also presents measures aimed at a stronger focus on corruption in EU internal and external policies.

Anti-Corruption Report

Starting in 2013, the Commission will publish an Anti-Corruption Reportevery two years as an EU evaluation and monitoring mechanism. The Report will identify trends and weaknesses that need to be addressed, and stimulate exchange of best practices. It will give a better reflection of the efforts made and problems encountered, and of the causes of corruption.

The Report will be based on data from different sources, including the monitoring mechanisms of the Council of Europe, the Organisation for Economic Co-operation and Development (OECD) and the United Nations, but also from independent experts, research findings, the European Anti-Fraud Office (OLAF), Eurojust, Europol, the European Anti-Corruption Network, Member States, Eurobarometer surveys and civil society.

Implementation of existing instruments

The Commission urges the EU countries to transpose all European legislation against corruption in the private sector into their national law and to ensure that it is applied properly.

It also asks the Member States that have not already done so to ratify the existing international anti-corruption instruments: the Criminal Law Convention and the Civil Law Convention on Corruption of the Council of Europe, the United Nations Convention against Corruption and the OECD Convention.

The Commission also intends to enhance cooperation with those international authorities and will request EU participation in the Group of States against Corruption (GRECO) created within the Council of Europe.

Focus on corruption in EU policies

Anti-corruption should be an integral part of all relevant EU policies, both internal and external.

Internally, the Commission intends in particular to strengthen judicial and police cooperation in the field of corruption, in collaboration with Europol, Eurojust, the European Police College (CEPOL) and OLAF. It also aims to improve the training of law enforcement officials in this field.

The Commission will also propose modernised EU rules on confiscation of criminal assets to ensure that courts in Member States are able to effectively confiscate and recover criminal assets, including in cases involving corruption. Because corruption is often linked to money laundering, the Commission will present a strategy in 2012 to strengthen the quality of criminal financial investigations. Lastly, to gain a better measure of the extent of corruption and the effectiveness of anti-corruption measures, an Action Plan to improve statistics on crime and criminal justice is under preparation.

The Commission will also focus on modernising EU rules governing public procurement, accounting standards and statutory audit for EU companies. It has also adopted an Anti-Fraud Strategy against fraud affecting the financial interests of the Union.

Externally, the Commission will continue to focus strongly on the monitoring of anti-corruption policies in candidate countries and potential candidates for EU accession. It plans to make this fight a key aspect of the support given by the EU to countries participating in the Neighbourhood Policy. With regard to cooperation and development policies, the Commission promotes greater use of the conditionality principle, i.e. making compliance with international anti-corruption standards a condition of cooperation and development assistance.

Related Acts

Report from the Commission to the Council of 6 June 2011 on the modalities of European Union participation in the Council of Europe Group of States against Corruption (GRECO) [COM (2011) 307 final – Not published in the Official Journal].

of 28 September 2011 setting up the Group of Experts on Corruption [OJ C 286 of 30.9.2011].
The task of this Group of Experts is to advise the Commission on all matters relating to corruption and, in particular, to assist it in producing the EU Anti-Corruption Report.

Money laundering: prevention through customs cooperation

Money laundering: prevention through customs cooperation

Outline of the Community (European Union) legislation about Money laundering: prevention through customs cooperation

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Single market for capital

Money laundering: prevention through customs cooperation

Document or Iniciative

Regulation (EC) No 1889/2005 of the European Parliament and of the Council of 26 October 2005 on controls of cash entering or leaving the Community.

Summary

This regulation complements the provisions of Directive 91/308/EEC on prevention of the use of the financial system for the purpose of money laundering within the European Union (EU). Directive 91/308/EEC was replaced by Directive 2005/60/EC, which in particular extends the scope of the preventive measures to terrorist financing. The competent authorities * of the EU countries now have harmonised rules for the control of cash * entering or leaving the EU.

Obligation to declare

The regulation places an obligation on any natural person entering or leaving the EU and carrying cash of a value of EUR 10 000 or more to declare that sum to the competent authorities. The information provided must be correct and complete, otherwise the declaration is invalid.

The declaration is provided in writing, orally or electronically, to be determined by the EU country, and must contain information on:

  • the declarant, including full name, date and place of birth and nationality;
  • the owner and the amount and nature of the cash;
  • the intended recipient of the cash;
  • the provenance and intended use of the cash.

The information obtained, either from the declaration or as a result of controls, must be recorded and processed. It is made available to the authorities responsible for combating money laundering or terrorist financing in the EU country of entry or of exit. The information provided may be communicated to non-EU countries by the EU countries or by the Commission, subject to the consent of the competent authorities. The national and EU provisions on the transfer of personal data must be complied with.

Professional secrecy covers all information which is by nature confidential or which is provided on a confidential basis. It must not be disclosed without the express permission of the person or authority providing it. However, the competent authorities may be obliged by law to disclose this information, for instance in connection with legal proceedings. In such a case, any disclosure or communication of information must fully comply with prevailing data protection legislation.

Checking compliance with the obligation to declare

Officials of the competent authorities may check compliance with the obligation to declare by carrying out controls on natural persons. This includes controls on the natural persons themselves, their baggage and their means of transport. Such controls must comply with national legislation in this area.

In the event of failure to comply with the obligation to declare, cash may be detained by administrative decision in accordance with national legislation.

The information obtained may be made available to other EU countries, in particular where there is evidence of illegal activities. In such cases, Regulation (EC) No 515/97 on mutual assistance between the administrative authorities of the EU countries and cooperation between the latter and the Commission to ensure the correct application of the law on customs and agricultural matters applies mutatis mutandis. Where there are indications that the financial interests of the EU are adversely affected, the information will also be transmitted to the Commission.

Where it appears from the controls that a natural person is entering or leaving the EU with sums of cash lower than EUR 10 000 and where there is evidence of illegal activities associated with the movement of cash, that information may also be recorded and processed.

Penalties

By 15 June 2007, EU countries must lay down the penalties applicable in the event of failure to comply with the obligation to declare. Such penalties must be effective, proportionate and dissuasive.

Key terms used in the act
  • Competent authorities: the customs authorities of the EU countries or any other authorities empowered by EU countries to apply this regulation.
  • Cash: the term “cash” covers currency (banknotes and coins), but also other monetary instruments such as cheques, promissory notes, money orders, etc.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EC) No 1889/2005

15.12.2005

OJ L 309 of 25.11.2005

Related Acts

Commission report to the European Parliament and the Council on the application of Regulation (EC) No 1889/2005 of the European Parliament and of the Council of 26 October 2005 on controls of cash entering or leaving the Community pursuant to article 10 of this Regulation [COM (2010) 429 final – Not published in the Official Journal].
This report concludes that EU countries have effectively organised competent authorities to ensure that passengers comply with their cash declaration obligation. They have also implemented a penalty system and/or cash detention system for cases of non-compliance with the cash declaration requirements. However, in a few EU countries, some shortcomings have been detected in the recording, processing and making available of control information and in the introduction of national penalties. This report notes that EU countries need to be closely monitored to enhance the harmonisation of the implementation of Regulation (EC) No 1889/2005 (the “Cash Control Regulation”).