Brussels, 27/05/2005 (Agence Europe) - On 26 May, the European Parliament adopted a report by German Christian Democrat Hartmut Nassauer on the proposed third directive on the use of the financial system for the purposes of money laundering and the bankrolling of terrorism. The main amendments the Nassauer report brings to the proposed directive concern: the obligation on financial establishments and the professions covered by the directive to carry out more checks on the identity of their clients; the definition of “politically exposed persons”; a termination clause for the implementation of technical measures. This vote will pave the way for the definitive adoption of the directive at first reading at the Ecofin Council of 7 June.
According to the report, physical persons holding over 25% of the shares or voting rights of a corporate body (foundation or trust) will be subjected to identity check obligations. The MEPs defend this threshold by referring to national legislations on company law, which set at 20% or 25% the proportion of shares constituting a blocking minority. The Commission proposed a threshold of 10%.
The Financial Action Task Force on Money Laundering (FATF) recommends close monitoring of movements of funds of people placing their money in third countries. In order to transpose this recommendation into the directive, a definition of “politically exposed persons” will prove necessary. According to the report, people who hold or have been entrusted with an important public post, and the direct family members or people who are known to be on close terms, will be subject to reinforced vigilance measures. The MEPs nonetheless placed limits on the scope of the checks, by excluding national residents from this definition. “It is impossible to check every little town hall in every little town”, said Hartmut Nassauer. In a press release, French Socialists Vincent Peillon and Martine Roure welcomed this broad definition, which does not target only people from third countries, but also nationals of other Member States of the EU residing in the country in question. “The definition retained (…) surprises me with its lack of rigour and clarity”, said Astrid Lulling (EPP-ED, Luxembourg) in a press release, and goes “so far that the only real question is who is not affected”. It would have been better to distinguish “between Community and non-Community citizen” that between “national and non-national citizens”.
The report states that the adoption of rules and decisions of a technical nature will be possible over a period of four years following the entry into force of the directive. Hartmut Nassauer considers that this “sunset clause” would have the effect of limiting the Commission's powers of setting such rules. It creates a precedent as it has hitherto been used only in the context of the Lamfalussy procedure. When used in the field of financial services, the Lamfalussy approach comprises four levels which divide decision-making responsibilities between the various regulatory bodies at European and national levels depending on the nature of the legislation to be adopted (see EUROPE 8832).
In a press release, Charlie McCreevy welcomes the “intense cooperation” between the European institutions and the “modern defence means” soon to be put into place against money laundering and the financing of terrorism. The European Commissioner for the Internal Market and Services feels that in this particular fight, “the EU is an example to follow and live up to”.
The third directive on the fight against money laundering extends the scope of the directive to the funding of terrorism and to serious infringements such as corruption and fraud. It transposes FATF recommendations into European legislation. It includes new financial establishments and new professions: foundations, trusts, life-insurance intermediaries and people negotiating goods or services paid for in cash for a sum in excess of 15,000 EUR. The fight against money laundering has included banks since 1991 and, since 2001, lawyers, notaries, accountants, estate agents, art dealers, jewellers, auctioneers and casinos. The third directive repeals directive 91/308/EC.