AML update

Understanding the new EU measures on bank registers, cross-border access

The European Union has outlined plans to tackle the quick movement of criminal and terrorist cash between Member States.

Presently, crime gangs are able to transfer funds between different bank accounts in a matter of hours to prepare their terror acts or launder the proceeds of crime, the EU said.

It is also concerned that the number of cross-border cases involving the need for access to financial information is increasingly growing.

“With the current mechanisms, access to and exchange of financial information is too slow compared to the pace at which funds can be transferred across Europe and globally. The information obtained is often incomplete and comes too late,” it said.

It is therefore proposing rules that provide direct access to bank account information for law enforcement authorities and asset recovery offices, contained in national, centralised registries.

Although bank registers are already established by the 4th and 5th EU Anti-Money Laundering Directives, the new proposal widens the access to law enforcement authorities, and also cross-border access, an EU spokesman told KYC360.

The plans provide for “better cooperation between national law enforcement authorities and the national financial intelligence unit, as well as between member states, or cross-border access,” the EU explained.

Here’s some answers to questions about the new measures:

What information will be provided?

The competent authorities will have access to limited information which is strictly necessary to identify in which banks the subject of an investigation holds bank accounts. This information includes the owner’s name and date of birth, and the bank account number.

The authorities will not be able to access the content of the bank accounts – neither the balance of the accounts, nor details on the transactions. Once the authorities identify the financial institution, in most cases they will have to approach the respective institution and request further information, e.g. a list of transactions.

Who is authorised to directly access the financial information?

Under the current provisions of the Fourth Anti-Money Laundering Directive, the access to national centralised bank account registries is granted to Financial Intelligence Units (FIUs) and the anti-money laundering authorities.

However, the new proposal obliges Member States to designate the competent authorities, who will be able to access and search the national registry in their country, in addition to FIUs and the anti-money laundering authorities.

The relevant authorities can include the police, the prosecution offices, the tax authorities and anti-corruption authorities (to the extent that they investigate criminal offences), the Europol National Units and the Asset Recovery Offices.

How does the proposal fit into the current EU framework to fight money laundering and terrorist financing?

The Fourth and the soon-to-be-adopted Fifth Anti-money Laundering Directives establish centralised bank account registries (containing information on all bank accounts in a given country) or data retrieval systems in all Member States to which Financial Intelligence Units (FIUs) and anti-money laundering authorities have access.

However, the Anti-Money Laundering Directives focus primarily on preventive efforts to address money laundering, not on how financial information can be used for the prevention, detection, investigation or prosecution of criminal offences.

At the moment, law enforcement authorities can obtain only limited financial information from FIUs – and only when it is necessary for preventing and combatting money laundering and terrorist financing.

In addition, FIUs and competent authorities continue to face obstacles when interacting. This new proposal on improved cross-border access by law enforcement authorities to financial information complements and reinforces this existing framework.

How will the right to privacy and the right to the protection of personal data be ensured?

The proposal maintains a high level of protection of fundamental rights, in particular the right to the protection of personal data. It ensures that only limited information is made available to law enforcement officers, for example.

Exchanges of information will be also limited to a case-by-case basis and only where relevant to a specific case for the purpose of combating specified, serious criminal offences.

All the safeguards that are provided in the 2016 Data Protection Police Directive will also apply, including:

Time limits after which personal data must be deleted from these registries or its retention justified.

The access to, and processing of, this data is allowed but only to the extent that it is necessary.

The person of interest must be informed that their personal data can be accessed and, if appropriate, the reasons for which access is granted. It should be clear that they have a right to lodge a complaint.

Source: The European Commission

Read more:

Money laundering: EU outlines new measures on bank registers, cross-border access

EU: Parliament appoints chief for new money laundering, tax evasion committee

EU Sixth Anti-Money Laundering Directive (6AMLD) – Expert analysis of new EU measures