Money laundering and the financing of terrorism - European Union Committee Contents


Sub-Committee F (Home Affairs) of the House of Lords Select Committee on the European Union is conducting an inquiry into EU and international cooperation to counter money laundering and the financing of terrorism.

The EU and the international community have an extensive legislative framework and cooperation mechanism to counter money laundering and, particularly following the 9/11 attacks, to prevent and fight terrorist financing. EU measures include:

  • Council Decision 2000/642/EC of 17 October 2000 concerning arrangements for cooperation between financial intelligence units (FIUs);
  • Directive 2005/60/EC on the prevention of the use of the financial system for the purpose of money laundering;
  • Regulation (EC) No 1889/2005 on controls of cash entering or leaving the EU;
  • Regulation (EC) No 1781/2006 on information on the payer accompanying transfers of funds;
  • Directive 2007/54/EC on payment services in the internal market.

These instruments take into account the work undertaken by the Financial Action Task Force (FATF), the inter-governmental body which sets the international standard for anti-money laundering and terrorism financing measures. The work of equivalent regional bodies such as MONEYVAL based at the Council of Europe is also relevant.

In addition, EU cooperation in criminal law matters has been reinforced, for example by improving mutual assistance in respect of information held by banks, by such instruments as the Protocol to the 2000 Convention on mutual legal assistance, the 2005 Council of Europe Convention No 198 on laundering, search, seizure and confiscation of the proceeds from crime and on the financing of terrorism, and the 2003 EU-US Agreement on mutual legal assistance.

Globally, the EU cooperates with the UN mechanism by implementing UN sanctions targeted at people and organisations with links to Al-Qaida and the Taliban. It has also given effect to other UN Security Council Resolutions, such as Resolution 1373 (2001), calling for the freezing of terrorist related funds or assets in other contexts. The procedures at EU level for implementing UN Al-Qaida and Taliban sanctions were recently revised by the Council to comply with the judgment of the Court of Justice in the case of Kadi. Cooperation also takes place through Member States' adherence to and implementation of international agreements, and through dialogue with key partners, such as the United States.

This inquiry will focus on the role of the EU and its Member States in the global response to money laundering and terrorist financing, and the associated cooperation mechanisms of the anti-money laundering framework. It will examine the nature and extent of Member States' cooperation in this field. The inquiry will not examine in depth the legal obligations imposed on Member States, credit and financial institutions and related professions by the anti-money laundering framework.

The Sub-Committee welcomes evidence on all aspects of the inquiry, but in particular on the following:

Cooperation with and between Financial Intelligence Units (FIUs)

  • How effective is cooperation among FIUs, and between FIUs and other authorities? What are the practical results of this cooperation?
  • How does the private sector feed into this cooperation? To what extent is satisfactory feedback to the private sector required by international standards, and what happens in practice?
  • What is the extent of the feedback and input on terrorist financing issues from intelligence and security services?
  • To what extent are alternative remittance systems appropriately covered by obligations of cooperation in this context? What will be the impact of the implementation by Member States of the relevant provisions of Directive 2007/54/EC in this regard?

EU internal architecture

  • To what extent is the EU internal architecture adequate to counter current and future challenges?
  • What are the respective roles of Europol and Eurojust in countering money laundering and terrorist financing?

International cooperation

  • What have been the results of the third round of mutual evaluations of EU Member States to date carried out by the FATF and MONEYVAL, with particular reference to the effectiveness of international cooperation (including as between FIUs)?
  • To what extent has the formal framework for criminal justice cooperation in this area been effective?
  • To what extent are these systems used to enforce compliance with national tax obligations?

EU-UN cooperation

  • What is the extent of EU-UN cooperation on financing of terrorism? What are the longer-term implications of the Kadi judgment?

Monitoring implementation

  • What EU mechanisms exist for monitoring implementation of the relevant legislative measures, and what results in terms of formal compliance and effective implementation have so far emerged from the use of those measures?
  • What are the implications of those results for cooperation within the EU, and more broadly?
  • Has consideration been given within the EU or by the FATF to whether the overall results derived from the present system justify the burdens placed on the private sector?
  • Are there plans to review the existing EU legislation or international standards in a manner which would be more sensitive to the position of the private sector?

Compliance and equivalence

  • What are the powers and procedures with respect to those third countries which fail properly to implement international standards in these areas? Are these adequate?
  • Does the 2005 Directive adequately encourage non-EU States which have introduced equivalent systems to counter money laundering and the financing of terrorism?
  • How does the system for determining equivalence operate in practice?

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