13 Money laundering
| (26744)
11549/05
COM(05) 343
| Draft Regulation on information on the payer accompanying transfers of funds
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| Legal base | Article 95 EC; co-decision; QMV
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| Document originated | 26 July 2005
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| Deposited in Parliament | 29 July 2005
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| Department | HM Treasury |
| Basis of consideration | EM of 27 October 2005
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| Previous Committee Report | None
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| To be discussed in Council | 6 December 2005
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information awaited
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Background
13.1 The Financial Action Task Force (FATF) is an inter-governmental
body whose purpose is the development and promotion of national
and international policies to combat money laundering and terrorist
financing. Membership includes 31 countries and territories, including
the UK, and two regional organisations, one of which is the Commission.
Many of FATF's recommendations have been the subject of Community
legislation.[36]
The document
13.2 This draft Regulation would incorporate into Community law
FATF's Special Recommendation VII on originator information accompanying
wire transfers of money. The Commission says the proposal complements
existing measures by ensuring basic information on the payer of
transfers of funds is immediately available to the appropriate
authorities.
13.3 The proposed Regulation would
- set out the extent of originator
information that should be sought and verified;
- require transmission of verified originator information
with a wire transfer;
- set out the treatment of transfers that lack
complete originator information by the payee's Payment Service
Provider;
- require Member States to introduce effective,
proportionate and dissuasive rules on penalties for infringements
and to notify the Commission of those rules and of the implementing
authorities by 30 June 2006; and
- establish a derogation for independent territories
and for the transfer of funds to charitable organisations within
Member States.
13.4 The Regulation would have direct effect in the
United Kingdom from 1 January 2007.
The Government's view
13.5 The Economic Secretary to the Treasury (Mr Ivan
Lewis) says that throughout negotiations on implementation of
this Special Recommendation, industry worldwide has been consulted
to ensure that the obligations of the agreement could be met within
the capabilities of existing systems at minimal cost. Because
of this approach the Government's own public consultation elicited
the very strong message from industry that the costs associated
with the Commission's proposal for a Regulation were marginal
and acceptable. The Minister sends us his department's Regulatory
Impact Assessment which records the consultative process and shows
how industry points have been addressed.
13.6 The Minister says HM Revenue and Customs is
currently consulting the money service business sector with a
view to adopting an effective, proportionate and risk-based regime
under the proposed regulation.
Conclusion
13.7 This seems a useful addition to the important
regime countering terrorist financing and money laundering. But
before considering the document further we should like an assurance
from the Minister that the derogation for the transfer of funds
to charitable organisations within Member States would not create
a loophole exploitable by terrorists. Meanwhile we do not clear
the document.
36 See (25949) 11134/04: HC 34-i (2005-06), para 50
(4 July 2005). Back
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