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Money laundering

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MONEY LAUNDERING

Money laundering is the process by which criminals conceal the illegal origin of their property or income.

The EU is working to prevent the misuse of the financial system and to improve cooperation between EU Member States to fight against money laundering. Its measures are governed by the Treaty on the Functioning of the European Union (TFEU):

  • under Title VII (approximation of laws for the internal market): with the creation of the internal market, rules were implemented throughout the EU in order to effectively prevent money laundering and the financing of terrorism. Financial movements are regulated to ensure that transactions can be fully traced and monitored. Financial and certain non-financial operators must also identify their clients (including beneficial owners of companies and trusts), monitor transactions and report any suspicions of money laundering to Financial Intelligence Units;
  • under Title V (police and judicial cooperation in criminal matters): focuses on defining offences and on strengthening mutual assistance.

EU financial crime rules are mostly based on international standards adopted by the Financial Action Task Force.

  • Directive (EU) 2018/843 – the EU’s Fifth Anti-Money Laundering Directive, which amends the Fourth Anti-Money Laundering Directive (Directive (EU) 2015/849) – aims to combat money laundering and the financing of terrorism by preventing the financial market from being misused for these purposes.
  • Directive (EU) 2018/1673 aims to criminalise money laundering when it is intentional and with the knowledge that the property came from criminal activity. It defines criminal offences and sanctions in the area of money laundering and allows Member States to criminalise money laundering where the offender suspected or ought to have known that the property came from criminal activity.

In 2020, the European Commission adopted an EU action plan on preventing money laundering and terrorist financing, which includes measures it will take to better enforce, supervise and coordinate the relevant EU rules. At the same time, it published a method to identify high-risk non-EU countries with deficient anti-money laundering and countering terrorist financing regimes that pose significant threats to the EU’s financial system.

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