8 Money laundering and terrorist
financing
| (34950)
9968/13
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| European Central Bank Opinion on a draft Directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing and on a draft Regulation on information accompanying transfers of funds (CON/2013/32)
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| Legal base | —
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| Deposited in Parliament | 30 May 2013
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| Department | HM Treasury
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| Basis of consideration | EM of 13 June 2013
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| Previous Committee Report | None
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| Discussion in Council | Not known
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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Background
8.1 The EU has in place legislation to prevent money laundering
and terrorist financing, currently Directive 2005/60/EC (Third
Money Laundering Directive or Third MLD) and Council Regulation
1781/2006 (the Wire Transfer Regulation).
8.2 In February the Commission presented a draft
Directive and a draft Regulation to revise and replace the Third
MLD and the Wire Transfer Regulation, to reflect recent changes
made to the international standards on anti-money laundering (AML)
and counter terrorist financing (CTF) as set by the intergovernmental
organisation, Financial Action Task Force (FATF).[28]
8.3 When we considered these proposals, in March,
we noted the Government's support for the Commission's approach
in this draft legislation and for the generality of the detail
and the need for EU-level action in this area. But we noted also
that the Government was continuing engagement with business and
was giving further consideration to a number of points, such as
the extended scope in relation to gambling. So we asked, before
considering the documents again, to hear about how the Government's
thinking was developing and, in particular, whether this revealed
any significant problems with the proposals. Meanwhile the documents
remained under scrutiny.[29]
The document
8.4 The European Central Bank (ECB) has now issued
this Opinion on the draft Directive and the draft Regulation.
The ECB is supportive of both Proposals and does not highlight
any areas of real concern. It says that:
- the proposals correctly and
effectively address the weaknesses identified in the current anti-money
laundering and counter-terrorist financing regime;
- they update the regime to take account of identified
threats from money laundering and terrorist financing and the
revised international standards to counter those threats; and
- they will improve the clarity and consistency
of the applicable rules across Member States.
8.5 On the draft Directive the ECB makes one
observation, namely that Member States are entitled to adopt or
retain in force stricter provisions in the field covered by the
proposal, and comments that any such measures should be carefully
weighed against the expected public benefits. As for the draft
Regulation the ECB:
- supports not including within
the scope of the legislation persons who provide credit or financial
institutions solely with a message or other support systems for
transmitting funds or with clearing and settlement systems;
- notes that this is important for the continued
smooth functioning of the payment systems in the EU;
- recommends this exemption should be provided
for in the enacting terms of the Regulation, and not just in the
recitals; and
- recommends the definitions in the Regulation
be amended in order to be consistent with the terms in the Payment
Services Directive and that '"person-to-person" transfer
of funds' be more clearly defined.
The Government's view
8.6 The Commercial Secretary to the Treasury
(Lord Deighton) does not discuss the policy implications of the
ECB Opinion itself. Instead he reminds us that:
- the Government is fully supportive
of the revised international standards on anti-money laundering
and counter-terrorist financing and recognises that an amending
Directive is required in order to reflect the revised standards
throughout the EU;
- it also welcomes the proposals for a Regulation
which reflect the new global standards and address areas where
gaps in transparency still remain; and
- it recognises the proposed Directive and Regulation
will have regulatory implications for businesses on varying scales
and continues to work with affected businesses on the implications
of the proposals to inform the Government's position in the negotiations.
8.7 Additionally, the Minister tells us that:
- negotiations on the proposals
have started under the Irish Presidency, with a general approach
expected in the Council towards the end of this year; and
- the Government expects final adoption to be achieved
in early- to mid-2014 at the earliest, but more likely later that
year.
Conclusion
8.8 We remind the Minister that we await information
about how the Government's thinking is developing and, in particular,
whether this reveals any significant problems with the draft Directive
and draft Regulation. In responding to that earlier request we
should like the Government to include how the ECB Opinion plays
into that thinking.
8.9 Meanwhile this document also remains under
scrutiny.
28 See http://www.fatf-gafi.org/pages/aboutus/. Back
29
(34681) 6230/13, (34682) 6231/13: see HC 86-xxxv (2012-13), chapter
14 (13 March 2013). Back
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