European Commission announces reform plans – AML Regulation and EU AML supervisor in the making?
On 7 May 2020, the European Commission (the “Commission”) introduced a new set of proposals to address money laundering and terrorist financing on an European Union (“EU”) level (see link). These proposals exit of:
- an Action Plan for a Comprehensive EU policy on Preventing Money Laundering and Terrorist Financing (the “Action Plan”);
- a new methodology to identify high-risk third countries that have strategic deficiencies in their national anti-money laundering and countering terrorist financing regimes (the “New Methodology third countries”); and
- an updated list of high-risk third countries with strategic deficiencies in their regime regarding anti-money laundering and countering terrorist financing (the “Updated List of high-risk third countries”).
Below, we will discuss the Action Plan, the New Methodology third countries and the Updated List of high-risk third countries.
- Action Plan
The Action Plan is built on the following six pillars:
- Effective application of EU rules (timeline: ongoing);
- A single EU rulebook (timeline: Commission proposal Q1 2021);
- EU-level supervision (timeline: Commission proposal Q1 2021);
- A coordination and support mechanism for FIUs (timeline: proposal Commission Q1 2021);
- Enforcing EU-level criminal law provisions and information exchange (timeline: Commission proposal Q1 2021);
- The EU’s global role in combatting AML/CFT (timeline: methodology Q2 2020).
In the Action Plan, the Commission announces, inter alia, that it will introduce a more harmonised set of rules with respect to anti-money laundering and terrorist financing a European level. This harmonised set of rules may be introduced via a directly binding EU AML/CFT regulation. Furthermore, the Commission plans to set up a supervisor on the EU-level to oversee the new set of rules. This may be EBA or a newly-formed supervisor.
The Commission has launched a public consultation so that authorities, stakeholders and citizens can provide their feedback. The public consultation runs until 29 July 2020 (see link).
- The New Methodology third countries
Secondly, the Commission has published a new methodology to identify high-risk third countries that have strategic deficiencies in their national anti-money laundering and countering terrorist financing regimes. The key new elements concern: (i) the interaction between the EU and Financial Action Task Force listing process; (ii) an enhanced engagement with third countries; and (iii) reinforced consultation of EU Member States experts.
- Updated List of high-risk third countries
Lastly, the Commission has listed the following countries as high-risk third countries with strategic deficiencies in their regime regarding anti-money laundering and countering terrorist financing: The Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Panama and Zimbabwe. The following countries will be delisted: Bosnia-Herzegovina, Ethiopia, Guyana, Lao People’s Democratic Republic, Sri Lanka and Tunisia.
The Commission will amend the list in the form of a Delegated Regulation. The Delegated Regulation is submitted to the European Parliament and Council for approval within one month (with a possible one-month extension). The addition of the aforementioned countries to the Updated List of high-risk third countries are planned to apply from 1 October 2020.
Leading role of the Netherlands
The Netherlands plays a leading role in the push of a European approach in the fight against money laundering and terrorist financing. For example, the Netherlands, together with France and Germany (amongst others), published a position paper that advocated a European supervisory mechanism for money laundering and terrorist financing (see link).