No C 106/6 Official Journal of the European Communities 28. 4. 90 
II 
(Preparatory Acts) 
COMMISSION 
Proposal for a Council Directive on prevention of use of the financial system for the purpose of 
money laundering 
COM(90) 106 final — SYN 254 
(Submitted by the Commission on 23 March 1990) 
(90/C 106/06) 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Article 57 (2), 
third sentence thereof, 
Having regard to the proposal from the Commission, 
In cooperation with the European Parliament, 
Whereas when credit and financial institutions are used 
to launder proceeds from criminal activities (hereinafter 
'money laundering'), the soundness and stability of the 
particular institution concerned and confidence in the 
financial system as a whole could be seriously 
jeopardized, thereby losing the trust of the public; 
Whereas lack of Community action against money laun­
dering could lead Member States, with the purpose of 
protecting their financial system, to adopt measures 
which could be inconsistent with the completion of the 
single market; whereas, in order to facilitate their 
criminal activities, launderers could try to take advantage 
of the freedom of capital movements and freedom to 
supply financial services which the integrated financial 
area involves, if certain coordinating measures are not 
adopted at Community level; 
Whereas money laundering has an evident influence on 
the rise of organized crime in general and drug traf­
ficking in particular; whereas there is more and more 
awareness that combating money laundering is one of 
the most effective means of opposing this form of 
criminal activity, which constitutes a particular threat to 
Member States' societies; 
Whereas money laundering must be mainly combated by 
penal means and within the framework of international 
cooperation among judicial and law enforcement auth­orities, as has been undertaken, in the field of drugs, by 
the United Nations Convention Against Illicit Traffic in 
Narcotic Drugs and Psychotropic Substances, adopted 
on 19 December 1988 in Vienna (hereinafter 'the Vienna 
Convention'); 
Whereas a penal approach should, however, not be the 
only way to combat money laundering, since the 
financial system can play a highly effective role; whereas 
reference must be made in this context to the Recom­
mendation of the Council of Europe of 27 June 1980 
and to the Declaration of Principles adopted in 
December 1988 in Basle by the banking supervisory 
authorities of the Group of Ten, both of which 
constitute major steps in order to prevent the use of the 
financial system for purposes of money laundering; 
Whereas money laundering is usually carried out in an 
international context so that the criminal origin of the 
funds can be better disguised; whereas measures exclu­
sively adopted at a national level, without taking account 
of international coordination and cooperation, would 
have very limited effects; 
Whereas any measures adopted by the Commission in 
this field should be consistent with other action 
undertaken in other international fora; whereas the 
Commission, to this end, has participated, together with 
fifteen Community and non-Community countries, in 
the important work carried out by the Financial Action 
Task Force on money laundering, established in July 
1989 by the Paris Summit of the Seven Most Developed 
Countries; 
Whereas the European Parliament has requested the 
Commission, in several resolutions, to establish a global 
Community programme to combat drug trafficking, 
including provisions on prevention of money laundering; 
Whereas, in order to avoid the difficulties of establishing 
a generally accepted definition of money laundering it is 
appropriate to follow the definition adopted by the 
Vienna Convention; whereas, however, since the 
28. 4.90 Official Journal of the European Communities No C 106/7 
phenomenon of money laundering not only affects 
proceeds from drug offences, but also those from any 
serious crimes, this definition should be extended to 
include laundering of proceeds of serious criminal 
offences, as defined by the Member States; 
Whereas making money laundering a criminal offence in 
the Member States, although it goes beyond the scope of 
the financial system, constitutes a necessary condition for 
any action to combat this phenomenon and in particular 
to permit cooperation between financial institutions or 
banking supervisors and judicial authorities; whereas, in 
this context, ratification and implementation by the 
Member States of the Vienna Convention is an essential 
measure to oppose money laundering in the field of 
drugs; 
Whereas ensuring that credit and financial institutions 
require identification of their customers when entering 
into business relations or conducting transactions, and 
that they keep records of the identity documents 
required, are necessary to avoid launderers' taking 
advantage of anonymity to carry out their criminal acti­
vities; whereas such provisions must also be extended, as 
far as possible, to any beneficial owners; 
Whereas ensuring that credit and financial institutions 
examine with special attention any unusual operation not 
having an apparent economic or lawful purpose and that 
they refrain from entering into any suspected money-
laundering transaction is necessary in order to preserve 
the soundness and integrity of the financial system as 
weil as to contribute to combating this phenomenon; 
Whereas preserving the financial system from money 
laundering is a task which cannot be carried out by the 
judicial and law enforcement authorities without the 
cooperation of credit and financial institutions and their 
supervisory authorities; whereas banking secrecy must be 
lifted in criminal cases; whereas a mandatory system of 
reporting suspicious transactions is the most effective 
way to accomplish such cooperation; whereas a special 
protection clause is necessary to exempt employees and 
directors from responsibility by breaching restrictions on 
disclosure of information; 
Whereas establishment by credit and financial institutions 
of procedures of internal control and training 
programmes in this field are complementary provisions 
without which the other measures contained in this 
Directive could become ineffective; 
Whereas, since money laundering can be carried out not 
only through credit and financial institutions but also 
through other types of professions and undertakings 
involving cash transaction business, Member States must 
extend, where applicable, this Directive to include these 
professions and undertakings, HAS ADOPTED THIS DIRECTIVE: 
Article 1 
For the purposes of this Directive, 
— credit institution is defined in accordance with the 
first indent of Article 1 of Council Directive 
77/780/EEC (>), 
— financial institution means an undertaking other than 
a credit institution whose principal activity is to carry 
out one or more of the operations included in Nos 2 
to 12 and 14 of the list annexed to Council Directive 
89/646/EEC (2), as well as an insurance company 
duly authorized according to Council Directives 
73/239/EEC (3) and 79/267/EEC (4), 
— money laundering means: 
— the conversion or transfer of property, knowing 
that such property is derived from a serious 
crime, for the purpose of concealing or disguising 
the illicit origin of the property or of assisting any 
person who is involved in committing such an 
offence or offences to evade the legal conse­
quences of his action, 
and 
— the concealment or disguise of the true nature, 
source, location, disposition, movement, rights 
with respect to, or ownership of property, 
knowing that such property is derived from a 
serious crime, 
— property means assets of every kind, whether 
corporeal or incorporeal, movable or immovable, 
tangible or intangible, and legal documents or 
instruments evidencing title to or interest in such 
assets, 
— serious crime means a crime specified in Article 3 (1) 
(a) and (c) of the Vienna Convention, terrorism and 
any other serious criminal offence (including in 
particular organized crime), whether or not 
connected with drugs, as defined by the Member 
States, 
— competent authorities means the national authorities 
empowered by law or regulation to supervise credit 
or financial institutions. 
(') OJ No L 322, 17. 12. 1977, p. 30. 
(2) OJ No L 386, 30. 12. 1989, p. 1. 
(») OJ No L 228, 16. 8. 1973, p. 3. 
(4) OJ No L 63, 13. 3. 1979, p. 1. 
No C 106/8 Official Journal of the European Communities 28. 4. 90 
Article 2 
Member States shall ensure that money laundering of 
proceeds from any serious crime is treated as a criminal 
offence according to their national legislation. 
Article 3 
Member States shall ensure that credit and financial 
institutions require identification of their customers when 
entering into business relations or conducting trans­
actions and, in the case of doubt whether customers are 
acting on their own behalf, that these institutions take 
reasonable measures to establish the real identity of the 
persons on whose behalf a transaction is carried out or 
an account is opened. Credit and financial institutions 
shall keep records of the identity documents required 
until at least five years after relations with their clients 
have ended. 
Article 4 
Member States shall ensure that credit and financial 
institutions examine with special attention any unusual 
transaction not having an apparent economic or visible 
lawful purpose, and that such institutions refrain from 
entering into any transaction which they have reason to 
suspect may have any relation to money laundering. 
Article 5 
Member States shall ensure: 
1. that credit and financial institutions and their 
directors and employees cooperate fully with the 
relevant judicial or law enforcement authorities 
competent for criminal matters: 
— by informing these authorities, on their own 
initiative, of any facts they discover which could 
be related to a money laundering offence, 
— by furnishing these authorities with all information 
requested in the case of any criminal inquiry or 
rogatory commission on money laundering carried 
out according to the applicable legislation. 
2. that the disclosure in good faith to the relevant 
judicial or law enforcement authorities competent for 
criminal matters by any employee or director of a 
credit or financial institution of any suspicion or belief 
that an operation is aimed at or connected to money 
laundering, shall not constitute a breach of any 
restriction on disclosure of information imposed by 
contract or by any legislative, regulatory or adminis­
trative provision, and shall not involve for such 
employees and directors any civil or penal responsi­
bility of any kind. Article 6 
Member States shall ensure that if, in the course of 
inspections carried out in credit or financial institutions 
by the competent authorities, or in any other way, these 
authorities discover facts that could constitute evidence 
of money laundering, they inform the relevant judicial or 
law enforcement authorities competent for criminal 
matters. 
Article 7 
Member States shall ensure: 
1. that credit and financial institutions establish adequate 
procedures of internal control in order to prevent, 
detect and impede their engaging in operations 
related with money laundering; 
2. that credit and financial institutions take the appro­
priate measures so that their employees are aware of 
the provisions contained in this Directive, and that 
they also establish special training programmes for 
their employees, to help them detect operations which 
may be related to money laundering as well as to 
instruct them as to how to proceed in such cases. 
Article 8 
Member States shall extend the provisions of this 
Directive, where applicable, to professions and under­
takings, other than credit and financial institutions, 
which because of their involvement with cash transaction 
business, may be particularly susceptible to being used 
for money laundering purposes. 
Article 9 
1. Member States shall take the measures necessary to 
comply with this Directive by 1 January 1992 at the 
latest. 
The provisions adopted pursuant to the first 
subparagraph shall make express reference to this 
Directive. 
2. Member States shall communicate to the 
Commission the text of the main provisions of national 
law which they adopt in the field governed by this 
Directive. 
Article 10 
This Directive is addressed to the Member States.