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EU anti-money laundering (AML) and Combating the Financing of Terrorism (CFT) single rule book

In “An Economy that Works for People”

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On 7 May 2020, the European Commission adopted an action plan for a comprehensive Union policy on preventing money laundering and terrorist financing.

Among other measures, the action plan announced the adoption of a legislative proposal on reinforcing and developing the EU anti-money laundering (AML) and combating the financing of terrorism (CFT) in the first quarter of 2021. Answering a Commission's call for advice on the issue, the European Banking Authority (EBA) supported harmonising the relevant EU legal framework in a (directly applicable) regulation.

In its November 2020 Conclusions, the ECOFIN Council invited the Commission to prioritize work on the EU single rulebook and, based on that , the establishment of an EU level AML/CFT supervision and the coordination and support mechanism for the FIUs. It noted, however, that the clarification and harmonisation of the AML/CFT legal framework does not necessarily need to result in the imposition of additional obligations on obliged entities. It also called on the Commission to present legislative proposals on these three related issues at the same time, in order to allow for simultaneous drafting in view of the links between them.

On 20 July 2021, the Commission presented a package consisting of four legislative proposals to strengthen the EU AML/CFT provisions. The package includes a proposal for a regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.

The proposed regulation would be the central element of what is commonly referred to as an EU 'single rulebook' on AML/CFT. Its detailed and directly applicable provisions would replace the minimum rules of the EU AML Directives, currently in force.  Obligations imposed on entities required to prevent money laundering ('obliged entities'), transparency of information regarding persons owning or controlling the customers of such entities and the misuse of anonymous instruments (such as crypto-assets) are among the main issues addressed by the proposal.

The regulation would thus extend the list of obliged entities to include all crypto-asset service providers – as recommended by the Financial Action Task Force (FATF) – and streamline beneficial ownership requirements across the EU.  It would also restrict transactions in cash, setting at €10 000 a maximum cap for accepting or making payments in cash by persons trading in goods or providing services. Moreover, it would harmonise the EU approach to third countries with strategic deficiencies in their AML/CFT regimes.

In the European Parliament, the proposal has been jointly assigned (under Rule 58) to the Committees on Economic and Monetary Affairs (ECON) and on Civil Liberties, Justice and Home Affairs (LIBE). The Committee on Legal Affairs (JURI), designated as committee for opinion, has decided not to issue one. Eero Heinäluoma (S&D, Finland) and Damien Carême (Greens/EFA, France), from the ECON and LIBE committees respectively, have been appointed as co-rapporteurs.

On 16 March 2022, the co-rapporteurs presented their draft report. The report was adopted by the two committees on 28 March 2023.

On 7 December 2022, the Council Council agreed its position on the single rulebook. On 19 April 2023, the Committee decision to enter into interinstitutional negotiations was confirmed by plenary (Rule 71).

References:

Further reading:

Author: Piotr Bąkowski, Members' Research Service, legislative-train@europarl.europa.eu

As of 20/05/2023.