EU states rebuked for failing to implement AML measures

Justice commissioner raps knuckles of 17 member states that have failed to meet the deadline for implementing 4MLD package

European justice commissioner Věra Jourová has cautioned more than a dozen EU member states over their failure to implement the region’s landmark Fourth Anti-Money Laundering Directive (4MLD).

In letters to the governments of 14 countries in which the Directive has yet to be absorbed into national legislation, Jourová warned that the Commission could take them to the European Court of Justice if their lack of action on the matter persists.

She issued a similar rebuke to a further three nations in which 4MLD’s measures have only been partially adopted.

Speaking to the Financial Times, Jourová stressed that the low rate of adoption was unacceptable at a point when the EU has mounted a campaign against illegal finance, in reaction to recent terrorist incidents.

In Jourová’s view, “[4MLD] equips us much better. It sets safeguards regarding financial flows from high-risk third countries, it deals with modern risks such as prepaid card payments and operations in virtual currencies.”

She added: “I now expect swift action from the member states concerned to fix this. I hope this is just a small hiccup, not a sign of serious foot-dragging.”

The Directive came into force on 26 June – the date by which member states were required to enshrine it on their statute books.

On that very day, the European Commission published a statement welcoming the formal activation of the measures, which:

  • reinforce the risk-assessment obligation for banks, lawyers and accountants, as set out in previous anti-money laundering (AML) directives;
  • set clear transparency requirements regarding beneficial ownership, with a view to storing relevant data in a central register accessible to national authorities;
  • facilitate cooperation and exchange of data between financial intelligence units from different member states, with the aim of identifying and following suspicious money transfers to prevent and detect crime or terrorist activities;
  • establish a coherent policy towards non-EU countries that have deficient anti-money laundering and counter-terrorist financing rules; and
  • reinforce the sanctioning powers of competent authorities.

In the 26 June statement, Jourová said: “Terrorists and criminals still find ways to finance their activities and to launder illicit gains back into the economy. The new rules as of today are crucial to closing further loopholes.

“I urge all member states to put them in place without delay: lower standards in one country will weaken the fight against money laundering and terrorist financing across the EU.”

However, according to Jourová’s words to the FT, the only countries that managed to fully implement 4MLD on time are Austria, Belgium, Croatia, the Czech Republic, France, Germany, Italy, Slovenia, Spain, Sweden and the UK.

So, even a country that is currently negotiating its exit from the EU has promulgated 4MLD in its national laws.

Michael Ruck, senior associate and financial regulations expert at law firm Pinsent Masons, said: “It is somewhat surprising that while a number of countries, including the UK, have been able to implement the directive within the specified timetable that such a large number of countries have not been able to do so.

He added: “This may be a sign of intentional delay, or it may be that these countries have been dealing with issues they consider to be higher up their agendas.

“The provisions within the Directive have not proved too complicated for a number of countries to implement, which suggests this is unlikely to be a reason for the delay.”

Find the full text of 4MLD here.

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