Tamara Tanaskovic/ April 5, 2020/ Uncategorized

The EU is a money launderer’s paradise, despite ever stricter European regulations. But combating money laundering, terrorist financing and organized crime is essential as they can compromise the integrity, stability and reputation of the financial sector and threaten a country’s internal security. After all, the International Monetary Fund (IMF) estimates that the annual volume of money laundering is approximately two to five percent of global economic output.

On November 12, 2018, approximately 6 months after the adoption of the 5th EU Money Laundering Directive, the European Parliament published further guidelines to strengthen the fight against money laundering through Directive (EU) 2018/1673 (6th EU Money Laundering Directive).

The directive aims to harmonize the criminal liability and the procedural requirements for the prosecution of money laundering in the EU countries and for international cooperation.

The deadline for transposition of the directive into national law is December 12, 2020.

It should be noted that the directive does not affect the 5th Money Laundering Directive, which was already implemented in national law in January. The extent to which German criminal law should be adapted remains to be clarified. Many of the provisions of the directive are already part of § 261 StGB.

Therefore, Directive (EU) 2018/1673 – which only contains 16 articles – cannot be called a “real” money laundering directive.

What changes with EU’s 6th Directive?
  • The directive increases the minimum sentence for money laundering offenses for individuals from one year to four years.
  • The directive lists 22 specific predicate offenses related to money laundering, which all EU Member States must prosecute. Those crimes include environmental offenses, cybercrime, and tax offenses related to direct and indirect taxes.
  • Criminal liability no longer depends on the precise definition of the predicate offense from which the assets originate, but negligent conduct can also be made punishable. In other words, if the offender suspected or should have known that the assets originated from a criminal activity.
  • Aggravating circumstances, such as connections to a criminal organization or offenses related to the exercise of certain professional activities has been introduced to identify accomplices of the money laundering process.
  • Obstacles to cross-border judicial and police cooperation are to be removed by establishing common rules to improve investigations.
  • The criminal liability for self-money laundering will be extended.
  • One of the most important changes in the framework of the directive is the extension of criminal liability to legal persons (e.g. companies or partnerships) and to persons in certain positions (representatives, decision-makers or persons with control authority) who commit offences for the benefit of their organization, even if the offense was made possible by lack of supervision or control of the individual.
  • In addition to fines, other sanctions can be imposed, such as exclusion of public grants or assistance, temporary or permanent exclusion from access to public finance, including tendering procedures, grants and permits, temporary or permanent ban on the pursuit of a commercial activity or even temporary or permanent closure of facilities used to commit the crime .

It remains to be seen what the EU’s next steps will be. Certainly, the EU is continuing to investigate the effects of cryptocurrencies on the fight against money laundering. Possibly a 7th Money Laundering Directive is in prospect or even the first “money laundering regulation” of the EU. A regulation is a legal act of the European Union with general application. Regulations form part of the Union’s secondary legislation. A regulation therefore would have a direct effect on all EU Member States.

More about EU’s money laundering directives:

Tamara Tanaskovic

About Tamara Tanaskovic

Tamara Tanaskovic is a Senior Consultant with targens GmbH. After her university degree with the focus on criminal law, postgraduate studies in London in the fields of competition law, bank regulation and compliance followed. She is currently project manager within the product SMARAGD MDS and therefore responsible for the creation and optimization of rulesets in coordination with the respective department of the customer company. Furthermore, the specialist review and the determination of legal and regulatory requirements to the SMARAGD Compliance Suite are part of her core competences.