Changes from plenary report to adopted text

RemovedEXPLANATORY STATEMENT

RemovedGeneral reflections

RemovedIt has become clear for some time that the current framework to combat money laundering and terrorist financing (AML/CTF) in the EU is ineffective. While the EU legislation lays down some of the most advanced standards in the world, it has not been timely transposed by Member States or enforced properly at national level. The divergences in the implementation of past AML Directives have also seriously undermined the effectiveness of the framework. Therefore, the co-rapporteurs welcome the AML Package proposed by the Commission, which consists of different legislative instruments, including the 6th AML Directive (AMLD). The co-rapporteurs also welcome the proposal to establish an Anti-Money Laundering Authority (AMLA).

RemovedIt should be understood that the framework to combat ML/TF is only as effective as its weakest spot (be it a country, an institution, an economic sector). This is all the more relevant in the EU single market, which combines common rules and freedoms. Aiming just for average improvements is far from enough.

RemovedThe Russian aggression against Ukraine and the outcome of the sanctions that followed the war has proved to us that the rules and procedures currently in place do not give rise to desired outcomes. Even as sanctions are directed only to a small number of high-profile cases, the identification of owners of high value goods and assets, such as mansions, private planes and mega-yachts was, in the current circumstances, too challenging a task for the competent authorities to undertake. This shows weaknesses of the current ML/TF frameworks, as there are reasonable suspicions that some of money used by persons under sanction regime do not have a clear origin. The experience from this episode should be reflected in the new legislation.

RemovedFrom the discussions with different stakeholders, it has become clear that both the absence of detailed rules and the divergences of practices in national implementation of the AML Directives have affected the ability of competent authorities to identify suspicious transactions and truly disrupt criminal activity, especially where it crosses borders. We need to close all the remaining gaps, while making the most of the existing system as the foundation upon which improvement can be made. In addition, we must have in mind that impact linked to ML/TF requirements on honest persons, entrepreneurs and firms should be limited and proportionate.

RemovedTopical reflections:

RemovedIt is important to safeguard that persons who take positions in the management of certain obliged entities, or who are beneficial owners of those obliged entities, fulfil certain requirements relating notably to honesty and integrity and good repute. Co-rapporteurs propose to strengthen these requirements and further specify supervisory powers necessary to enforce them.

RemovedAML Directives in force already require Member States to prevent the misuse of legal persons for ML/TF and to ensure that there is adequate, accurate and up-to-date information on the beneficial ownership and control of legal persons and arrangements through public registers. The Commission proposal in AMLD6 is a good basis for discussions on the requirements that EU law lays down for the establishment of beneficial ownership registers by Member States. Still, based on international best practices and to further enhance the accuracy of the data provided in the registers, the Co-Rapporteurs propose stronger requirements, notably on the verification of the data and use of technology for this purpose, and on the abilities of entities in charge of the registers to sanction inaccuracies and inconsistencies. Furthermore, the co-rapporteurs believe that some public access to beneficial ownership information on trusts and similar legal arrangements should no longer be restricted.

RemovedIt is also very important to set out clear rules for access and search of the beneficial ownership registers by competent authorities, supervisors and obliged entities. Therefore, the Co-Rapporteurs propose a specific provision laying down the criteria for searches in the beneficial ownership registers through the European Central Platform, which we hope will be operational by the time the Directive will come into effect.

RemovedReal estate continues to represent an attractive commodity for criminals to launder the proceeds of their illicit activities, as it sometime unfortunately in practice allows obscuring the true source of the funds and the identity of the beneficial owner. Co-Rapporteurs wish, therefore, to ensure timely access to beneficial ownership data of real estate owners, including through registers or electronic data retrieval systems. Member States should be required to provide access to this information to the competent authorities via a single access point, and include information not only on the economic value but also on the means of payment. Registers or electronic data retrieval systems shall be interconnected by Real Estate Data (RED) single access point, which shall be operated by the Commission, allowing Member States discretion to determine which system they will use to fulfil this requirement.

RemovedIt has also become clear that while information on high value goods, such as yachts and planes is collected, it is rarely useful for the purpose of detecting ML/TF. Therefore, the Co-Rapporteurs introduce an obligation for Member States to provide access to competent authorities to beneficial ownership information on the owners of certain goods whose value is estimated above a certain threshold, as well as, the access to information of means of payment of some of these assets.

RemovedFinancial Intelligence Units (FIUs) are part of and play a central role in a jurisdiction's AML/CTF operational network, and provide crucial support to the work of other competent authorities. Co-Rapporteurs introduced changes in the chapter governing the functioning of FIUs, aiming to foster access to information by FIUs and exchange of information between them, making the most of technological advancements, while safeguarding fundamental rights. The movement of illicit money increasingly crosses borders and may affect different Member States, which is why it is essential that the information flows without unnecessary hurdles and delays, while opportunities for data matching between Member States should be further improved.

RemovedThe ability of FIUs to suspend transactions remains crucial to disrupt ML/TF, which is why the Co-Rapporteurs chose to detail such a procedure further in the draft report.

RemovedProper supervision of both credit and financial institutions and other obliged entities in the non-financial sector sits at the heart of an effective AML/CFT framework. In the past decade, several high-profile money laundering cases revealed significant shortcomings with respect to certain banks’ risk management and their surveillance by both AML/CFT and prudential supervisors. Recent scandals also brought to light flawed supervision of non-financial entities. Co-rapporteurs welcome the Commission's proposals to further detail supervisory action and coordination. Co-rapporteurs have further detailed he role of AMLA, where there are disagreements between supervisors and where joint analysis teams are required. AMLA is also given a role in assessing the conditions for cooperation with third country financial supervisors on a case-by-case basis.

RemovedThe co-rapporteurs fully support the Commission’s proposal for public oversight of self-regulatory bodies, who are in charge of supervision of specific obliged entities in the non-financial sector, and further detail requirements in the relevant provisions. Co-rapporteurs believe, however, a public authority, not a self-regulatory body, should supervise the real estate sector.

RemovedFurther to the mentions already made, co-rapporteurs wish to increase the role of AMLA in the context of the rules and procedures laid down in this Directive. Co-rapporteurs propose, in particular, that AMLA should

Removed-draft and publish guidelines on the elements to be taken into account by supervisors when assessing suitability of the management and beneficial ownership of certain obliged entities, as well as on the circumstances where conflicts of interest may arise amongst FIU staff members.

Removed-keep a repository of the national authorities responsible or mechanisms established to coordinate the national response to risks, identified on a national basis;

Removed-conduct peer reviews regarding the functioning of national entities in charge of beneficial ownership registers, and on the fulfilment, by FIUs, of specific requirements laid down in this Directive.

Removed-be given the power to suspend access to the FIU.net, should the peer review of a specific FIU raise serious concerns;

Removed- include in the technical standards that AMLA should prepare the ranges of pecuniary sanctions relative to the turnover of the entity that shall be applied in breaches of AML obligations .