The European Parliament devises a new agreement to restrict access and abuse of financial services information

New measures to combat money laundering and terrorist financing 

The European Parliament has adopted a set of stringent measures to strengthen the fight against money laundering and terror financing, alongside circumventing sanctions within EU. These regulations are presented by EU in the form of a “legislative package” comprising three key measures which provide various practical justifications.

What is at stake?

While adopting the legislative package, the European Parliament has given its approval to three crucial texts that ensure strengthening the AML/CFT system. The foremost text amongst approved is “The European Union’s single rule book”, that not only offers valuable clarifications on customer due diligence rules, but also aims to enhance transparency to the beneficiaries. Additionally, the rule book enables supervision of instruments such as crypto actives and new participative financing platforms that are used to promote anonymity.

Moreover, the Sixth Directive on the fight against money laundering encourages strengthening cooperation among various units of financial intelligence. This cooperation is designed to ensure proper reporting, prevention and effectively combating AML/CFT risks. Furthermore, the directive enables access to necessary and reliable information by the competent authorities.

In line with above two texts, significant stride has been made by establishment of the European Anti-Money Laundering Authority (AMLA). This regulatory body possess both supervisory and investigative powers to ensure compliance with AML/CFT requirements. One of its key functions would be to monitor 40 entities with the highest residual risk profile and a minimum presence in two Member States.

Provisional agreement on access to financial information 2023

As part of the fight against money laundering and terror financing, access to financial information is a crucial element to ensure both identification and confiscation of proceeds of crime. Additionally, such information is also important to ensure that investigations are completed with due diligence.

Even though the presence of cross-border cooperation already exists, this provisional agreement ensure that member states fully comply with the future AML/CFT Directive, by providing them access to easier and centralised data on illegal transactions.

What is at stake?

A pivotal move in data centralisation involves setting up a single access point towards providing centralised registers for financial intelligence units (FIUs) as Tracfin in France. Additionally, other players such as law enforcement agencies will be able to access financial information relating to suspicious transactions.

Therefore, with an aim to enable simplification of financial information for all stakeholders, European Parliament along with the Council of Europe requires maintaining consistency in the formats of bank statements issued by financial institutions.

This agreement forms the part of another AML/CFT legislation, thus requires pre-approval from the representatives of the Member States before it is formally adopted by both the Council and Parliament.