3rd EU Directive on Money Laundering

World Compliance 3rd EU Directive on Money Laundering

Contents
What is dened as terrorist nancing and money laundering? ................................................1 Member state requirement to install a nancial intelligence unit (FIU) ................................. 3 Sanctions for failure to comply .......................... 3 A World in Compliance...................................... 4

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3rd EU Directive on Money Laundering The directive is designed to prevent money laundering and terrorist nancing through the nancial system.

What is dened as terrorist nancing and money laundering?

The member states of the European Union prohibit terrorist nancing and money laundering and can implement stricter provisions in this area. The following conduct provides the denition for money laundering: The transfer or conversion of property that is derived from or participation in criminal activity with the objective of hiding or disguising the origin of the property Providing assistance to any individual involved in the commission of this type of activity Disguising or intentionally concealing the nature, source, disposition, location, movement and ownership rights of the property Acquiring, possessing and or using the property with full knowledge that the property derived from criminal activity An individual who intentionally commits this type of behavior must recognize that the property in question derives from criminal activity. Awareness, intention and purpose may be assessed through careful examination of the facts and circumstances surrounding the case. The directive goes on to include participation, association with, attempts to, aiding, advising and or facilitating of the items mentioned earlier. The directive considers that any activities that generated the property in relation to money laundering, whether within a member state or non-EU member state is considered part of the criminal activity. Terrorist nancing is dened as providing and collecting funds, either directly or through a third party for the purpose of using them for the purpose of committing an offense as prescribed in articles 1 through 4 (refer to the Council Framework Decision 2002/475/JHA of 13 June 2002) concerning ghting terrorism. This includes falsifying documents, taking hostages and leading a terrorist group among others.

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The legal professions responsibility concerning vigilance with their customers The directive covers both nancial institutions as well as individuals working in professional roles as accountants, auditors, notaries, tax advisors, real estate agents and other legal professions. Both the nancial institutions as well as the previously mentioned professional segments are obliged to follow adequate due diligence processes in the following areas: Beginning a new business relationship Processing a nancial transaction in excess of EUR 15,000 If a person is suspected to be carrying out terrorist nancing or money laundering, without regards to the thresholds and or exemptions If the customer information that was collected is suspected to be false and or inadequate All of these measures require that the customer be properly identied and that said identity be veried. In addition, information concerning the business purpose, the nature of the business as well as identifying the recipient are also requirements. The degree to which each measure is completed will be determined by the organizations risk management assessment. This is dependent on the customer type and business relationship among other criteria. The directive allows member state and both the institutions and professionals operating under its guidelines to use third parties to meet the requirements. Institutions and professional entities covered by the directive are obliged to conduct enhanced due diligence when the risk of terrorist nancing or money laundering is high. This involves additional measures designed to verify and certify that information be factual. This is particularly the case where an individual isnt physically present and or when dealing with an international relationship with a respondent institution from a non EU member country. The directive does not allow nancial institutions to hold anonymous accounts/passbooks.

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Member state requirement to install a nancial intelligence unit (FIU) Member states are obliged to implement a centralized (national) nancial intelligence unit (FIU). The unit is tasked with compiling, analyzing and reporting to the appropriate authorities, any potential threat concerning either terrorist nancing or money laundering. The unit must be provided with proper resources to perform its duties and the member states must ensure those said units have access to the necessary administrative, nancial as well as law enforcement information it needs. Both institutions and individuals operating under the directive are obliged to immediately inform the EU if the suspect that terrorist nancing or money laundering is taking place. They are required to submit all of the information requested by the FIU. Institutions and individuals operating under the directive are obliged to desist from executing a transaction that is suspected of being a part of terrorist nancing or money laundering, until the FIU has been informed. The directive does however leave it up to the member states to decide whether individuals in a legal professional role abide by this rule, while in the course of defending and or representing their customer. Institutions and individuals are required not to inform the customer or other related parties that the suspect information has been reported to the FIU. The exclusion would be only for law enforcement purposes. Institutions and individuals are required to maintain all information for a period of ve years. In addition, they are required to develop due diligence procedures that include employee, training information dissemination, escalating information and record keeping. Sanctions for failure to comply Institutions and individuals operating in the member states are required to comply with the directive. Failure to do so will hold them liable to penalties designed to be both proportionate and dissuasive.

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A World in Compliance
WorldCompliance offers a complete solution to the increasingly unforgiving task of compliance. As more and more leaders realize open source intelligence equals protecting prots, they turn towards WorldCompliance as their preventative solution. For complete protection for your organization wherever you are based in the world, email: North-America@worldcompliance.com South-America@worldcompliance.com Europe@worldcompliance.com Middle-East@worldcompliance.com Asia@worldcompliance.com Africa@worldcompliance.com Oceania@worldcompliance.com and our nearest representative will contact you. Alternatively call (+1 877 258 1877) in the U.S., or visit worldcompliance.com for further details. Europe Germany Latin America Mexico Middle East +49 951 3020 688 +49 951 3020 688 +571 211 9601 +52 722 477 3985 +971 4 312 4043

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