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European Parliament votes through draft proposals for Fourth Money Laundering Directive

Source: Wed, 12 Mar 2014 12:25 GMT
Author: Compliance Complete
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Euro and U.S. dollar banknotes are seen in this picture illustration taken in Prague January 23, 2013 REUTERS/David W Cerny
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Martin Coyle, Compliance Complete

The European Parliament has voted through draft proposals for the Fourth Money Laundering Directive, which will see the creation of central public registers setting out the beneficial owners of companies and trusts in Europe. The proposals will also extend the due diligence rules on politically exposed persons (PEPs) to domestic officials. 

Members of the European Parliament yesterday voted resoundingly 643 to 30 in favour of a common position on revisions to the Third Money Laundering Directive following agreement reached by the Economic and Monetary Affairs Committee (ECON) and the Committee on Civil Liberties, Justice and Home Affairs (LIBE) on amendments last month.

The changes will see public central registers set up in each EU country listing information on the ultimate beneficial ownership of companies, foundations, holdings and trusts. The registers will be interconnected across Europe and access will be made public to those who complete a basic online registration. The new directive will also tighten up the checks firms will have to make on domestic PEPs to establish their sources of wealth and funds. A Europe-wide list of PEPs may also be introduced under the directive.

Risk-based approach

At the heart of the directive will be the risk-based approach, which is largely the route which has been taken by the UK regulator. This will mean that white and black lists of countries with deficient anti-money laundering defences will be abolished as this would go against such an approach. 

"Today is a good day for law-abiding citizens, but a lousy day for criminals," said Arturs Krišjānis Kariņš, rapporteur for the Economic and Monetary Affairs Committee.

Nienke Palstra, policy officer at the Transparency International EU office, said: "The fallout from events in the Ukraine once again demonstrates the inadequacies of the EU's anti-money laundering rules. The European Parliament has recognised the need for public registers to address these shortcomings. EU governments should do the same."

A LIBE spokeswoman said that further negotiations on the directive would start under the Italian presidency. "This [vote] was to ensure that parliament had its first reading. It is up to the next parliament to start negotiations with the [European] Council," she told Compliance Complete. "There is still a long way to go," she said.

The spokeswoman said that the text for the directive had been kept the same as that adopted by the ECON and LIBE committees. The new parliamentary session will start in June, although it is unlikely that any discussions will take place on the directive before September at the earliest.

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