3rd Money laundering Directive by lee92256

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									3rd Money laundering Directive

Commission proposes to update and improve Directive
A proposal to further strengthen the EU‟s defences against money laundering and terrorist
financing has been presented by the European Commission. The proposal would update and
improve the EU‟s existing anti-money laundering Directive. In particular, money laundering
would be defined as concealing or disguising the proceeds of a wider range of serious
crimes. It would also ensure coherent application in all Member States of the latest
Recommendations of the Financial Action Task Force (FATF), the world anti-money
laundering body, which now cover not only the laundering of the proceeds of crime but the
financing of terrorism. The proposal will be forwarded to the European Parliament and the
EU‟s Council of Ministers for adoption under the so-called „co-decision‟ procedure.
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More details and comparision with 2nd money laundering directive:

Taken over from 1991 Directive:
 Tax advisers are covered by the Directive for all forms of professional activity
(Art.2.1(3a)), lawyers only in case of financial and real estate action.
 Reporting arrangements for legal, i.g. to national chambers
 No obligation to report suspicions for those legal advisors who are legally recognised and
controlled (recital 13).

NEW
 The present proposal widens the scope of the 2nd money laundering directive and covers
all serious offences relating to terrorist financing which implies a serious extension of the
Directive to “white money”;
 It includes modifications to take account of the 40 FATF recommendations, notably as
regards the defintion of the beneficial ownership (Art.3.8) and customer identification and
verification (Art.7-9); according to Art. 7.1 lit.b the adviser has to take ”reasonable measures
to verify identity of the beneficial owner”; the professional will be required to obtain more
detailed knowledge of the business of the client and also to follow it up, i.e. keeping data up-
to-date (Art.7.1 lit.c,d); the extent of these verification measures depends on the risk level of
money laundering activity (Art.7.2). Art.8.1 sets a time frame for identification measures
(“before or during …establishing a business relationship…”); Member States shall require the
professional to end the mandat and report to the competent body if he cannot comply with
these verification measures (Art.8.2).
 Simplified customer due diligence measures may apply to notaries and lawyers (Art.10.1
lit c)) and other professions (Art.15), amongst them Tax Advisers. Referrals without new
identification procedure among members of these professions may also be allowed under
certain conditions.
 The proposal seeks to prevent employees from being threatened when being at the origin
of reporting a suspicion of money laundering (Art.24).
 Member state option to allow members of professions acting as a legal adviser to inform
their clients on a report is not conform with 40 FATF recommendations. However, where a
legal adviser is seeking to dissuade a client from illegal activity this will not constitute a
breach of the ban on warning the client (Art.25).
Directly comparable services need to be treated in the same manner.This includes Tax
Advisers when performing lawyer´s services (recital 14).
 The proposal entrusts the Commission with limited implementing powers and creates a
new Committee according to the provisions of comitologie procedure to assist her (Art.38).


Karin Sauerteig, Brussels, 12 October 2004

								
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