P7_TA(2014)0191

Prevention of the use of the financial system for the purpose of money laundering and terrorist financing ***I

European Parliament legislative resolution of 11 March 2014 on the proposal for a directive of the European Parliament and of the Council on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (COM(2013)0045 — C7-0032/2013 — 2013/0025(COD))

(Ordinary legislative procedure: first reading)

(2017/C 378/45)

The European Parliament,

having regard to Article 294(2) and Article 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C7-0032/2013),

having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

having regard to the opinion of the European Central Bank of 17 May 2013 (1)

having regard to the opinion of the European Economic and Social Committee of 23 May 2013 (2) ,

having regard to the opinion of the Economic and Monetary Affairs Committee of 9 December 2013 on the proposal for a directive amending Council Directive 78/660/EEC and 83/349/EEC as regards disclosure and non-financial and diversity information by certain large companies as groups;

having regard to the joint deliberations of the Committee on Economic and Monetary Affairs and the Committee on Civil Liberties, Justice and Home Affairs under Rule 51 of the Rules of Procedure,

having regard to the report of the Committee on Economic and Monetary Affairs and the Committee on Civil Liberties, Justice and Home Affairs and the opinions of the Committee on Development and the Committee on Legal Affairs (A7-0150/2014),

Calls on the Commission to refer the matter to Parliament again if it intends to amend its proposal substantially or replace it with another text;

Instructs its President to forward its position to the Council, the Commission and the national parliaments.

(1) OJ C 166, 12.6.2013, p. 2.

(2) OJ C 271, 19.9.2013, p. 31.

P7_TC1-COD(2013)0025

Position of the European Parliament adopted at first reading on 11 March 2014 with a view to the adoption of Directive 2014/…/EU of the European Parliament and of the Council on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national Parliaments,

Having regard to the opinion of the European Central Bank (1),

Having regard to the opinion of the European Economic and Social Committee (2),

Acting in accordance with the ordinary legislative procedure (3),

Whereas:

(1) Massive flows of dirty illicit money can damage the stability and reputation of the financial sector and threaten the internal market, and terrorism international development. Terrorism shakes the very foundations of our society. The key facilitators of illicit money flows are secretive corporate structures operating in and through secrecy jurisdiction, often also referred to as tax havens. In addition to further developing the criminal law approach, a preventive effort at Union level, prevention via the financial system is indispensable and can produce complementary results. However, the preventive approach should be targeted and proportional, and should not result in the establishment of a comprehensive system for controlling the entire population. [Am. 1]

(2) The soundness, integrity and stability of credit and financial institutions and confidence in the financial system as a whole could be seriously jeopardised by the efforts of criminals and their associates either to disguise the origin of criminal proceeds or to channel lawful or unlawful money for terrorist purposes. In order to facilitate their criminal activities, money launderers and terrorist financers could try to take advantage of the freedom of capital movements and the freedom to supply financial services which the integrated financial area entails, if . Therefore , certain coordinating measures are not adopted necessary at Union level. At the same time, the objectives of protection of society from criminals and protection of the stability and integrity of the European financial system should be balanced against the need to create a regulatory environment that allows companies to grow their businesses without incurring disproportionate compliance costs. Any requirement imposed on obliged entities to fight money laundering and terrorist financing should therefore be justified and proportionate. [Am. 2]

(3) The current proposal is the fourth directive to deal with the threat of money laundering. Council Directive 91/308/EEC (4) defined money laundering in terms of drugs offences and imposed obligations solely on the financial sector. Directive 2001/97/EC of the European Parliament and of the Council (5) extended the scope both in terms of the crimes covered and the range of professions and activities covered. In June 2003 the Financial Action Task Force (FATF) revised its Recommendations to cover terrorist financing, and provided more detailed requirements in relation to customer identification and verification, the situations where a higher risk of money laundering may justify enhanced measures and also situations where a reduced risk may justify less rigorous controls. Those changes were reflected in Directive 2005/60/EC of the European Parliament and of the Council (6) and Commission Directive 2006/70/EC (7). In implementing the FATF Recommendations, the Union should fully respect its data protection law, as well as the Charter of Fundamental Rights of the European Union (Charter) and the European Convention for the Protection of Human Rights and Fundamental Freedoms. [Am. 3]

(4) Money laundering and terrorist financing are frequently carried out in an international context. Measures adopted solely at national or even Union level, without taking account of international coordination and cooperation, would have very limited effects. The measures adopted by the Union in that field should therefore be consistent with compatible with, and at least as stringent as, other action undertaken in other the international fora. Avoiding tax and mechanisms of non-disclosure and concealment can be used as strategies employed in money laundering and terrorist financing in order to avoid detection . Union action should continue to take particular account of the FATF Recommendations, which constitutes the foremost and the recommendations of other international body bodies active in the fight against money laundering and terrorist financing. With a view to reinforce the efficacy of the fight against money laundering and terrorist financing, Directives 2005/60/EC and 2006/70/EC should , where appropriate, be aligned with the new FATF Recommendations adopted and expanded in February 2012. However, it is essential for such an alignment with the non-binding FATF Recommendations to be carried out in full compliance with Union law, especially as regards Union data protection law and the protection of fundamental rights as enshrined in the Charter. [Am. 4]

(4a) Particular attention should be paid to the fulfilment of the obligations set out in Article 208 of the Treaty on the Functioning of the European Union (TFEU), which requires coherence in development cooperation policy in order to stem the increasing trend of money laundering activities being moved from developed countries to developing countries with less stringent anti-money laundering law. [Am. 5]

(4b) In view of the fact that illicit financial flows, and in particular money laundering, represent between 6 and 8,7 % of the GDP of developing countries (8) , which is an amount 10 times larger than the assistance by the Union and its Member States to the developing world, the measures taken to combat money laundering and terrorist financing need to be coordinated and to take into account the Union's and the Member States' development strategy and policies which aim to fight against capital flight. [Am. 6]

(5) Furthermore, the misuse of the financial system to channel criminal or even clean money to terrorist purposes poses a clear risk to the integrity, proper functioning, reputation and stability of the financial system. Accordingly, the preventive measures of this Directive should cover not only the manipulation of money derived from serious crime but also and the collection of money or property for terrorist purposes. [Am. 7]

(5a) Irrespective of the penalties provided for in the Member States, the primary objective of all measures taken under this Directive should be to combat all practices which result in substantial illegal profits being generated. It should do so by taking all possible steps to prevent the financial system from being used to launder those profits. [Am. 8]

(6) The use of large cash payments is vulnerable to money laundering and terrorist financing. In order to increase vigilance and mitigate the risks posed by cash payments natural and legal persons trading in goods should be covered by this Directive to the extent that they make or receive cash payments of EUR 7 500 or more. Member States should be able to decide to adopt stricter provisions including a lower threshold. [Am. 9]

(6a) Electronic money products are increasingly used as a substitute for bank accounts. The issuers of such products should be under a strict obligation to prevent money laundering and terrorist financing. However, it should be possible to exempt electronic money products from customer due diligence if certain cumulative conditions are met. The use of electronic money that is issued without performing customer due diligence should be allowed for the purchase of goods and services only from merchants and providers who are identified and whose identification is verified by the electronic money issuer. For person-to-person transfers, the use of electronic money without performing customer due diligence should not be allowed. The amount stored electronically should be sufficiently small in order to avoid loopholes and to make sure that a person cannot obtain an unlimited amount of anonymous electronic money products. [Am. 10]

(6b) Estate agents are active in many different ways in the field of property transactions in the Member States. In order to reduce the risk of money laundering in the property sector estate agents should be included within the scope of this Directive where they are involved in financial transactions relating to property as part of their professional activities. [Am. 11]

(7) Legal professionals, as defined by the Member States, should be subject to the provisions of this Directive when participating in financial or corporate transactions, including providing tax advice, where there is the greatest risk of the services of those legal professionals being misused for the purpose of laundering the proceeds of criminal activity or for the purpose of terrorist financing. There should, however, be exemptions from any obligation to report information obtained either before, during or after judicial proceedings, or in the course of ascertaining the legal position of a client. Thus, legal advice should remain subject to the obligation of professional secrecy unless the legal counsellor is taking part in money laundering or terrorist financing, the legal advice is provided for money laundering or terrorist financing purposes or the lawyer knows that the client is seeking legal advice for money laundering or terrorist financing purposes.

(8) Directly comparable services should be treated in the same manner when provided by any of the professionals covered by this Directive. In order to ensure respect for the rights guaranteed by the Charter, in the case of auditors, external accountants and tax advisors, who, in some Member States, may defend or represent a client in the context of judicial proceedings or ascertain a client's legal position, the information they obtain in the performance of those tasks should not be subject to the reporting obligations in accordance with this Directive.

(9) It is important to highlight expressly that ‘tax crimes’ relating to direct and indirect taxes are included in the broad definition of ‘criminal activity’ under this Directive in line with the revised FATF Recommendations. The European Council of 23 May 2013 stated the need to deal with tax evasion and fraud and to fight money laundering in a comprehensive manner, both within the internal market and vis-à-vis non-cooperative third countries and jurisdictions. Agreeing on a definition of tax crimes is an important step in detecting those crimes, as too is public the disclosure of certain financial information by large companies operating in the Union on a country-by-country basis. It is also important to ensure that obliged entities and legal professionals, as defined by Member States, do not seek to frustrate the intent of this Directive or to facilitate or to engage in aggressive tax planning . [Am. 12]

(9a) Member States should introduce General Anti-Avoidance Rules (GAAR) on tax matters with a view to curbing aggressive tax planning and avoidance in accordance with the European Commission's recommendations on Aggressive Tax Planning on 12 December 2012 and the OECD Progress Report to the G20 on 5 September 2013. [Am. 13]

(9b) When they are performing or facilitating commercial or private transactions, entities which have a specific role in the financial system, such as the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), the central banks of the Member States and central settlement systems should, as far as possible, observe the rules applicable to other obliged entities adopted pursuant to this Directive. [Am. 14]

(10) There is a need to identify any natural person who exercises ownership or control over a legal person. While finding a specific percentage shareholding will not automatically result in finding the beneficial owner, it is an evidential one factor to be taken into account among others for the identification of the beneficial owner . Identification and verification of beneficial owners should, where relevant, extend to legal entities that own other legal entities, and should follow the chain of ownership until the natural person who exercises ownership or control of the legal person that is the customer is found. [Am. 15]

(11) It is important to ensure, and to enhance, the traceability of payments. The need for existence of accurate and up-to-date information on the beneficial owner of any legal entity, such as legal persons, trusts, foundations, holdings and all other similar existing or future legal arrangements is a key factor in tracing criminals who might otherwise hide their identity behind a corporate structure. Member States should therefore ensure that companies retain information on their beneficial ownership and make this adequate, accurate and up-to-date information available to competent authorities and obliged entities through central public registers, accessible on-line and in an open and secure data format, in accordance with Union data protection rules and the right to privacy as enshrined in the Charter. Access to such registers should be granted to competent authorities, in particular FIUs and obliged entities, as well as to the public subject to prior identification of the person wishing to access the information and to the possible payment of a fee. In addition, trustees should declare their status to obliged entities. [Am. 16]

(11a) The establishment of beneficial ownership registers by Member States would significantly improve the fight against money laundering, terrorist financing, corruption, tax crimes, fraud and other financial crimes. This could be achieved by improving the operations of the existing business registers in the Member States. It is vital that registers are interconnected if effective use is to be made of the information contained therein, due to the cross-border nature of business transactions. The interconnection of business registers across the Union is already required by Directive 2012/17/EU of the European Parliament and of the Council (9) and should be further developed. [Am. 17]

(11b) Technological progress has provided tools which enable obliged entities to verify the identity of their customers when certain transactions occur. Such technological improvements provide time-effective and cost-effective solutions to businesses and to customers and should therefore be taken into account when evaluating risk. The competent authorities of Member States and obliged entities should be proactive in combating new and innovative ways of money laundering, while respecting fundamental rights, including the right to privacy and data protection. [Am. 18]

(12) This Directive should also apply to those activities of the obliged entities covered by this Directive which are performed on the internet.

(12a) The representatives of the Union in the governing bodies of the EBRD should encourage the EBRD to implement the provisions of this Directive and to publish on its website an anti-money laundering policy, containing detailed procedures that would give effect to this Directive. [Am. 19]

(13) The use of the gambling sector to launder the proceeds of criminal activity is of concern. In order to mitigate the risks related to the sector and to provide parity amongst the providers of gambling services, an obligation for all providers of gambling services to conduct customer due diligence for single transactions of EUR 2 000 or more should be laid down. When carrying out that due diligence a risk based approach should be adopted that reflects the different risks for different types of gambling services and whether they represent a high or low risk for money laundering. The special characteristics of different types of gambling should also be taken into account, by, for example, differentiating between casinos, on-line gambling or other providers of gambling services . Member States should consider applying that threshold to the collection of winnings as well as wagering a stake. Providers of gambling services with physical premises (e.g. casinos and gaming houses) should ensure that customer due diligence, if it is taken at the point of entry to the premises, can be linked to the transactions conducted by the customer on those premises. [Am. 20]

(13a) Money laundering is becoming increasingly sophisticated and also includes illegal, and sometimes legal, betting, in particular in relation to sporting events. New forms of lucrative organised crime like match-fixing have arisen and have developed into a profitable form of criminal activity related to money laundering. [Am. 21]

(14) The risk of money laundering and terrorist financing is not the same in every case. Accordingly, a holistic risk-based approach based on minimum standards should be used. The risk-based approach is not an unduly permissive option for Member States and obliged entities. It involves the use of evidence-based decision making to better target the money laundering and terrorist financing risks facing the Union and those operating within it. [Am. 22]

(15) Underpinning the risk-based approach is a need for Member States and the Union to identify, understand and mitigate the money laundering and terrorist financing risks it faces. The importance of a supra-national approach to risk identification has been recognised at international level, and the European Supervisory Authority (European Banking Authority) (‘EBA’), established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council (10); the European Supervisory Authority (European Insurance and Occupational Pensions Authority) (‘EIOPA’), established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council (11); and the European Supervisory Authority (European Securities and Markets Authority) (‘ESMA’), established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council (12), should be tasked with issuing an opinion on the risks affecting the financial sector and, in cooperation with Member States, should develop minimum standards for risk assessments carried out by the competent national authorities. That process should, as far as possible, involve relevant stakeholders through public consultations . [Am. 23]

(16) The results of risk assessments at Member State level should, where appropriate, be made available in a timely manner to obliged entities to enable them to identify, understand and mitigate their own risks. [Am. 24]

(17) In order to better understand and mitigate risks at Union level, a supranational risk analysis should be carried out so that the risks of money laundering and terrorist financing to which the internal market is exposed can be identified effectively. The Commission should require the Member States to deal with scenarios considered to be high risk in an effective way. Furthermore, Member States should share the results of their risk assessments with each other and with the Commission, EBA, EIOPA and, ESMA (together referred to as the ‘ESAs’), and Europol , where appropriate. [Am. 25]

(18) When applying the provisions of this Directive, it is appropriate to take account of the characteristics and needs of small obliged entities which fall under its scope, and to ensure a treatment which is appropriate to the specific needs of small obliged entities, and the nature of the business.

(19) Risk itself is variable in nature, and the variables, either on their own or in combination, may increase or decrease the potential risk posed, thus having an impact on the appropriate level of preventative measures, such as customer due diligence measures. Thus, there are circumstances in which enhanced due diligence should be applied and others in which simplified due diligence may be appropriate.

(20) It should be recognised that certain situations present a greater risk of money laundering or terrorist financing. Although the identity and business profile of all customers should be established, there are cases where particularly rigorous customer identification and verification procedures are required.

(21) This is particularly true of business relationships with individuals who hold or have held important public positions, particularly those from countries where corruption is widespread , within the Union and internationally . Such relationships may expose the financial sector in particular to significant reputational and legal risks. The international effort to combat corruption also justifies the need to pay special attention to such cases and to apply appropriate enhanced customer due diligence measures in respect of persons who hold or have held prominent functions domestically or abroad and senior figures in international organisations. [Am. 26]

(21a) The need for enhanced customer due diligence measures in respect of persons who hold or have held prominent functions, whether domestically or abroad, and senior figures in international organisations should not, however, lead to a situation in which lists containing information on such persons are traded for commercial purposes. Member States should take appropriate measures to prohibit such activity. [Am. 27]

(22) Obtaining approval from senior management for establishing business relationships need not, in all cases, imply obtaining approval from the board of directors. Granting of such approval should be possible by someone with sufficient knowledge of the institution's money laundering and terrorist financing risk exposure and sufficient seniority to make decisions affecting its risk exposure.

(22a) It is essential for the Union to develop a common approach and a common policy to deal with non-cooperative jurisdictions that perform poorly in combating money laundering and terrorist financing. To that end, the Member States should act on and apply directly any lists of countries published by the FATF in their national systems to combat money laundering and terrorist financing. Furthermore, the Member States and the Commission should identify other non-cooperative jurisdictions on the basis of all information available. The Commission should develop a common approach to measures to be used to protect the integrity of the internal market against those non-cooperative jurisdictions. [Am. 28]

(23) In order to avoid repeated customer identification procedures, leading to delays and inefficiency in business, it is appropriate, subject to suitable safeguards, to allow customers whose identification has been carried out elsewhere to be introduced to the obliged entities. Where an obliged entity relies on a third party, the ultimate responsibility for the customer due diligence procedure remains with the obliged entity to whom the customer is introduced. The third party, or the person that has introduced the customer, should also retain his own responsibility for compliance with the requirements in this Directive, including the requirement to report suspicious transactions and maintain records, to the extent that he has a relationship with the customer that is covered by this Directive.

(24) In the case of agency or outsourcing relationships on a contractual basis between obliged entities and external natural or legal persons not covered by this Directive, any anti-money laundering and anti-terrorist financing obligations for those agents or outsourcing service providers as part of the obliged entities, may arise only from contract and not from this Directive. The responsibility for complying with this Directive should remain primarily with the obliged entity covered hereby. In addition, Member States should ensure that any such third parties may be held liable for breaches of national provisions adopted pursuant to this Directive. [Am. 29]

(25) All Member States have, or should, set up operationally independent and autonomous financial intelligence units (FIUs) to collect and analyse the information which they receive with the aim of establishing links between suspicious transactions and underlying criminal activity in order to prevent and combat money laundering and terrorist financing. Suspicious transactions should be reported to the FIUs, which should serve as a national centre for receiving, analysing and disseminating to the competent authorities suspicious transaction reports and other information regarding potential money laundering or terrorist financing. This should not compel Member States to change their existing reporting systems where the reporting is done through a public prosecutor or other law enforcement authorities, as long as the information is forwarded promptly and unfiltered to FIUs, allowing them to perform their tasks properly, including international cooperation with other FIUs. It is important that Member States provide FIUs with the necessary resources to ensure that they have full operational capacity to deal with the current challenges posed by money laundering and terrorist financing while respecting fundamental rights, including the right to privacy and data protection. [Am. 30]

(26) By way of derogation from the general prohibition on executing suspicious transactions, obliged entities may execute suspicious transactions before informing the competent authorities, where refraining from the execution thereof is impossible or likely to frustrate efforts to pursue the beneficiaries of a suspected money laundering or terrorist financing operation. This, however, should be without prejudice to the international obligations accepted by the Member States to freeze without delay funds or other assets of terrorists, terrorist organisations or those who finance terrorism, in accordance with the relevant United Nations Security Council resolutions.

(26a) Since a huge proportion of illicit financial flows ends up in tax havens, the Union should increase the pressure it brings to bear on those countries to cooperate, in order to combat money laundering and terrorist financing. [Am. 31]

(27) Member States should have the possibility to designate an appropriate self-regulatory body of the professions referred to in Article 2(1)(3)(a),(b), and (d) as the authority to be informed in the first instance in place of the FIU. In line with the case law of the European Court of Human Rights, a system of first instance reporting to a self-regulatory body constitutes an important safeguard to uphold the protection of fundamental rights as concerns the reporting obligations applicable to lawyers.

(28) Where a Member State decides to make use of the exemptions provided for in Article 33(2), it may allow or require the self-regulatory body representing the persons referred to therein not to transmit to the FIU any information obtained from those persons in the circumstances referred to in that Article.

(29) There have been a number of cases of individuals, including employees and representatives who report their suspicions of money laundering being subject to threats or hostile action. Although this Directive cannot interfere with Member States' judicial procedures, this is a crucial issue for the effectiveness of the anti-money laundering and anti-terrorist financing system. Member States should be aware of this problem and should do whatever they can to protect individuals, including employees and representatives from such threats or hostile action , as well as from other adverse treatment or adverse consequences, making it easier for them to report suspicions, thereby strengthening the fight against money laundering . [Am. 32]

(30) Directive 95/46/EC of the European Parliament and of the Council (13), as transposed into national law, is applicable to the processing of personal data for the purposes of this Directive.

(30a) Regulation (EC) No 45/2001 of the European Parliament and of the Council (14) is applicable to the processing of personal data by the Union institutions and bodies for the purposes of this Directive. [Am. 33]

(31) Certain aspects of the implementation of this Directive involve the collection, analysis, storage and sharing of data. The processing of personal data should be permitted in order to comply with the obligations laid down in this Directive, including carrying out customer due diligence, ongoing monitoring, investigation and reporting of unusual and suspicious transactions, identification of the beneficial owner of a legal person or legal arrangement, identification of a politically exposed person, sharing of information by competent authorities and sharing of information by financial institutions and obliged entities . The personal data collected should be limited to what is strictly necessary for the purpose of complying with the requirements of this Directive and not further processed in a way inconsistent with Directive 95/46/EC. In particular, further processing of personal data for commercial purposes should be strictly prohibited. [Am. 34]

(32) The fight against money laundering and terrorist financing is recognised as an important public interest ground by all Member States. The eradication of such phenomena requires a resolute political will and cooperation at all levels . [Am. 35]

(32a) It is of the utmost importance that investment that is co-financed by the Union budget fulfils the highest standards in order to prevent financial crimes including corruption and tax evasion. In 2008, the EIB therefore adopted an internal guideline entitled ‘Policy on preventing and deterring prohibited conduct in European Investment Bank activities’ with Article 325 TFEU, Article 18 of the EIB Statute and Council Regulation (EC, Euratom) No 1605/2002 (15) as its legal basis. Following adoption of the policy, the EIB is to report on suspicions or alleged cases of money laundering affecting EIB supported projects, operations and transactions to the Luxembourg FIU. [Am. 36]

(33) This Directive is without prejudice to the protection of personal data processed in the framework of police and judicial cooperation in criminal matters, including the provisions of Framework decision 2008/977/JHA. [Am. 37]

(34) The rights of access of the data subject are applicable to the personal data processed for the purpose of this Directive. However, access by the data subject to information contained in a suspicious transaction report would seriously undermine the effectiveness of the fight against money laundering and terrorist financing. Limitations on that right in accordance with Article 13 of Directive 95/46/EC may therefore be justified. However, such limitations have to be counterbalanced by the effective powers granted to the data protection authorities, including indirect access powers, laid down in Directive 95/46/EC, enabling them to investigate, on an ex officio basis or on the basis of a complaint, any claims concerning problems with personal data processing. This should in particular include access to the data file at the obliged entity. [Am. 38]

(35) Persons who merely convert paper documents into electronic data and act under a contract with a credit institution or a financial institution do not fall within the scope of this Directive, nor does any natural or legal person that provides credit or financial institutions solely with a message or other support systems for transmitting funds or with clearing and settlement systems.

(36) Money laundering and terrorist financing are international problems and the effort to combat them should be global. Where Union credit or financial institutions have branches or subsidiaries located in third countries where the law in that area is deficient, they should, in order to avoid the application of very different standards within the institution or group of institutions, apply Union standards or notify the competent authorities of the home Member State if application of such standards is impossible.

(37) Feedback should, where practicable where possible , be made available to obliged entities on the usefulness and follow-up of the suspicious transactions reports they present. To make this possible, and to be able to review the effectiveness of their systems to combat money laundering and terrorist financing Member States should keep and improve the relevant statistics. To further enhance the quality and consistency of the statistical data collected at Union level, the Commission should keep track of the Union-wide situation with respect to the fight against money laundering and terrorist financing and publish regular overviews , including an evaluation of national risk assessments. The Commission should carry out the first such overview within one year from the date of entry into force of this Directive. [Am. 39]

(37a) Member States should not only ensure that obliged entities comply with the relevant rules and guidelines, but should also have systems in place that actually minimise the risks of money laundering within those entities. [Am. 40]

(37b) In order to be able to review the effectiveness of their systems to combat money laundering and terrorist financing, Member States should keep and improve the relevant statistics. In order further to enhance the quality and consistency of the statistical data collected at Union level, the Commission should keep track of the Union-wide situation with respect to the fight against money laundering and terrorist financing and should publish regular overviews. [Am. 41]

(38) Competent authorities should ensure that, in regard to currency exchange offices, trust and company service providers or gambling service providers, the persons who effectively direct the business of such entities and the beneficial owners of such entities are fit and proper persons. The criteria for determining whether or not a person is fit and proper should, as a minimum, reflect the need to protect such entities from being misused by their managers or beneficial owners for criminal purposes.

(39) Taking into account the transnational character of money laundering and terrorist financing, coordination and cooperation between EU FIUs are extremely important. Such cooperation has so far been addressed only by Council Decision 2000/642/JHA (16). In order to ensure better coordination and cooperation between FUIs, and in particular to ensure that suspicious transactions reports reach the FIU of the Member State where the report would be of most use, more detailed, further going and up-dated rules should be included in this Directive.

(40) Improving the exchange of information between FIUs within the Union is of particular importance to face the transnational character of money laundering and terrorist financing. The use of secure facilities for the exchange of information, especially the decentralised computer network FIU.net and the techniques offered by that network such facilities should be encouraged by Member States. [Am. 42]

(41) The importance of combating money laundering and terrorist financing should lead Member States to lay down effective, proportionate and dissuasive sanctions in national law for failure to respect the national provisions adopted pursuant to this Directive. Member States currently have a diverse range of administrative measures and sanctions for breaches of the key preventative measures. This diversity could be detrimental to the efforts put into combating money laundering and terrorist financing and the Union's response is at risk of being fragmented. This Directive should therefore include a range of administrative measures and sanctions that Member States shall have available for systematic breaches of the requirements relating to customer due diligence measures, record keeping, reporting of suspicious transactions and internal controls of obliged entities. That range should be sufficiently broad to allow Member States and competent authorities to take account of the differences between obliged entities, in particular between financial institutions and other obliged entities, as regards their size, characteristics , level of risk and areas of activity. In the application of this Directive, Member States should ensure that the imposition of administrative measures and sanctions in accordance with this Directive and of criminal sanctions in accordance with national law does not breach the principle of ne bis in idem. [Am. 43]

(42) Technical standards in financial services should ensure consistent harmonisation and adequate protection of depositors, investors and consumers across the Union. As bodies with highly specialised expertise, it would be efficient and appropriate to entrust the ESAs with the elaboration of draft regulatory technical standards which do not involve policy choices, for submission to the Commission.

(42a) To allow competent authorities and obliged entities to better evaluate the risks arising from certain transactions, the Commission should draw up a list of the jurisdictions outside the Union that have implemented rules and regulations similar to those laid down in this Directive. [Am. 44]

(43) The Commission should adopt the draft regulatory technical standards developed by the ESAs pursuant to Article 42 of this Directive by means of delegated acts pursuant to Article 290 TFEU and in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010, of Regulation (EU) No 1094/2010 and of Regulation (EU) No 1095/2010.

(44) In view of the very substantial amendments that would need to be made to Directives 2005/60/EC and 2006/70/EC, they should be merged and replaced for reasons of clarity and consistency.

(45) Since the objective of this Directive, namely the protection of the financial system by means of prevention, investigation and detection of money laundering and terrorist financing, cannot be sufficiently achieved by the Member States, as individual measures adopted by Member States to protect their financial systems could be inconsistent with the functioning of the internal market and with the prescriptions of the rule of law and Union public policy but can rather, by reason of the scale and effects of the action, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve that objective.

(46) This Directive respects the fundamental rights and observes the principles recognised by the Charter, in particular, the respect for private and family life, the presumption of innocence, the right to protection of personal data, the freedom to conduct a business, the prohibition of discrimination, the right to an effective remedy and to a fair trial, and the right of defence. [Am. 45]

(47) In line with Article 21 of the Charterprohibiting any discrimination based on any ground, Member States have to ensure that this Directive is implemented, as regards risk assessments in the context of customer due diligence, without discrimination.

(48) In accordance with the Joint Political Declaration of Member States and the Commission of 28 September 2011 on explanatory documents, Member States have undertaken to accompany, in justified cases, the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. With regard to this Directive, the legislator considers the transmission of such documents to be justified.

(48a) Member States and obliged entities, when applying this Directive or national law transposing this Directive, are bound by Council Directive 2000/43/EC (17) . [Am. 46]

(48b) The European Data Protection Supervisor delivered an opinion on 4 July 2013 (18),

HAVE ADOPTED THIS DIRECTIVE:

CHAPTER I

GENERAL PROVISIONS

SECTION 1

SUBJECT-MATTER, SCOPE AND DEFINITIONS

Article 1

1. Member States shall ensure that money laundering and terrorist financing are prohibited.

2. For the purposes of this Directive, the following conduct, when committed intentionally, shall be regarded as money laundering:

(a) the conversion or transfer of property, knowing that such property is derived from criminal activity or from an act of participation in such activity, for the purpose of concealing or disguising the illicit origin of the property or of avoiding freezing or confiscation orders or of assisting any person who is involved in the commission of such activity to evade the legal consequences of that person’s action; [Am. 47]

(b) 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 criminal activity or from an act of participation in such activity;

(c) the acquisition, possession or use of property, knowing, at the time of receipt, that such property was derived from criminal activity or from an act of participation in such activity;

(d) participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the actions referred to in points (a), (b) and (c).

3. Money laundering shall be regarded as such even where the activities which generated the property to be laundered were carried out in the territory of another Member State or in that of a third country.

4. For the purposes of this Directive, ‘terrorist financing’ means the provision or collection of funds, by any means, directly or indirectly, with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out any of the offences within the meaning of Articles 1 to 4 of Council Framework Decision 2002/475/JHA (19), as amended by Council Framework Decision 2008/919/JHA (20).

5. Knowledge, intent or purpose required as an element of the activities referred to in paragraphs 2 and 4 may be inferred from objective factual circumstances.

Article 2

1. This Directive shall apply to the following obliged entities:

(1) credit institutions;

(2) financial institutions;

(3) the following natural or legal persons acting in the exercise of their professional activities: (a) auditors, external accountants and tax advisors; (b) notaries and other independent legal professionals, when they participate, whether by acting on behalf of and for their client in any financial or immovable property transaction, or by assisting in the planning or execution of transactions for their client concerning the: (i) buying and selling of real property or business entities; (ii) managing of client money, securities or other assets; (iii) opening or management of bank, savings or securities accounts; (iv) organisation of contributions necessary for the creation, operation or management of companies; (v) creation, operation or management of trusts, foundations, mutuals, companies or similar structures; [Am. 48] (c) trust or company service providers not already covered under point (a) or (b); (d) estate agents, including letting agents , in so far as they are involved in financial transactions ; [Am. 49] (e) other natural or legal persons trading in goods or services , only to the extent that payments are made or received in cash in an amount of EUR 7 500 or more, whether the transaction is executed in a single operation or in several operations which appear to be linked; [Am. 50] (f) providers of gambling services. With the exception of casinos, Member States may decide to exempt in full or in part certain gambling services, as referred to in point (3)(f) of the first subparagraph, from national provisions transposing this Directive on the basis of the low risk posed by the nature of the services on the basis of risk assessments. Before applying any such an exemption, the Member State concerned shall seek the approval of the Commission. [Am. 153]

2. Member States may decide that natural or legal persons that engage in a financial activity on an occasional or very limited basis where there is little risk of money laundering or terrorist financing occurring, do not fall within the scope of this Directive provided that the natural or legal person fulfils all of the following criteria:

(a) the financial activity is limited in absolute terms;

(b) the financial activity is limited on a transaction basis;

(c) the financial activity is not the main activity;

(d) the financial activity is ancillary and directly related to the main activity;

(e) the main activity is not an activity referred to in paragraph 1, with the exception of the activity referred to in point (3)(e) of paragraph 1;

(f) the financial activity is provided only to the customers of the main activity and is not generally offered to the public.

The firstsubparagraph shall not apply to natural or legall persons engaged in the activity of money remittance within the meaning of Article 4(13) of Directive 2007/64/EC of the European Parliament and of the Council (21).

3. For the purposes of point (a) of paragraph 2, Member States shall require that the total turnover of the financial activity does not exceed a threshold, which must be sufficiently low. That threshold shall be established at national level, depending on the type of financial activity.

4. For the purposes of point (b) of paragraph 2, Member States shall apply a maximum threshold per customer and single transaction, whether the transaction is carried out in a single operation or in several operations which appear to be linked. That threshold shall be established at national level, depending on the type of financial activity. It shall be sufficiently low in order to ensure that the types of transactions in question are an impractical and inefficient method for laundering money or for terrorist financing, and shall not exceed EUR 1 000.

5. For the purposes of point (c) of paragraph 2, Member States shall require that the turnover of the financial activity does not exceed 5 % of the total turnover of the natural or legal person concerned.

6. In assessing the risk of money laundering or terrorist financing occurring for the purposes of this Article, Member States shall pay special attention to any financial activity which is regarded as particularly likely, by its nature, to be used or abused for money laundering or terrorist financing purposes.

7. Any decision pursuant to this Article shall state the reasons on which it is based. Member States shall provide for the possibility of withdrawing that decision should circumstances change.

8. Member States shall establish risk-based monitoring activities or take any other adequate measures to ensure that the exemption granted by decisions pursuant to this Article is not abused.

Article 3

For the purposes of this Directive the following definitions shall apply:

(1) ‘credit institution’ means a credit institution as defined in point 1 of Article 4(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council (22), including branches thereof, as defined in point 17 of Article 4(1) of that Regulation, located in the Union, whether its head office is situated within the Union or in a third country;

(2) ‘financial institution’ means: (a) an undertaking other than a credit institution the principal activity of which is to pursue one or more of the activities listed in points (2) to (12) and points (14) and (15) of Annex I to Directive 2013/36/EU of the European Parliament and of the Council (23), including the activities of currency exchange offices (bureaux de change); (b) an insurance company duly authorised in accordance with Directive 2009/138/EC of the European Parliament and of the Council (24), insofar as it carries out activities covered by that Directive; (c) an investment firm as defined in point (1) of Article 4(1) of Directive 2014/65/EU of the European Parliament and of the Council (25); (d) a collective investment undertaking marketing its units or shares; (e) an insurance intermediary as defined in Article 2(5) of Directive 2002/92/EC of the European Parliament and of the Council (26), with the exception of intermediaries as referred to in Article 2(7) of that Directive, when they act in respect of life insurance and other investment related services; (f) branches of financial institutions as referred to in points (a) to (e) that are located in the Union, whether its head office is situated in the Union or in a third country;

(3) ‘property’ means assets of any kind, whether corporeal or incorporeal, movable or immovable, tangible or intangible, and legal documents or instruments in any form including electronic or digital, evidencing title to or an interest in such assets;

(4) ‘criminal activity’ means any kind of criminal involvement in the commission of the following serious crimes: (a) acts as defined in Articles 1 to 4 of Framework Decision 2002/475/JHA, as amended by Framework Decision 2008/919/JHA; (b) any of the offences referred in Article 3(1)(a) of the 1988 United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances; (c) the activities of criminal organisations as defined in Article 1 of Council Joint Action 98/733/JHA (27); (d) fraud affecting the Union's financial interests, at least serious, as defined in Article 1(1) and Article 2 of the Convention on the Protection of the European Communities' Financial Interests (28); (e) corruption; (f) all offences, including tax crimes offences related to direct taxes and indirect taxes, which are punishable by deprivation of liberty or a detention order for a maximum of more than one year or, as regards those States which have a minimum threshold for offences in their legal system, all offences punishable by deprivation of liberty or a detention order for a minimum of more than six months; [Am. 52; Am. does not concern all languages]

(4a) ‘ self-regulatory body’ means a body that has the power, recognised by national law, to establish the obligations and rules governing a certain profession or a certain field of economic activity, which must be complied with by natural or legal persons in that profession or field; [Am. 53]

(5) ‘beneficial owner’ means any natural person who ultimately owns or controls the customer and/or the natural person on whose behalf a transaction or activity is being conducted and includes at least: (a) in the case of corporate entities: (i) the natural person who ultimately owns or controls a legal entity through direct or indirect ownership or control over a sufficient percentage of the shares or voting rights in that legal entity, including through bearer share holdings, other than a company listed on a regulated market that is subject to disclosure requirements consistent with Union law or subject to equivalent international standards. A percentage In any event, a shareholding of 25 % plus one share shall be by a natural person is evidence of ownership or control through shareholding and applies to every level of direct and indirect ownership; a shareholding of 25 % plus one share in the customer, held by a corporate entity, which is under the control of a natural person, or by multiple corporate entities, which are under the control of the same natural person, shall be an indication of indirect ownership; the notion of control shall be determined, inter alia, in accordance with the criteria laid down in Article 22(1) to (5) of Directive 2013/34/EU of the European Parliament and of the Council (29) ; however, this applies without prejudice to the right for Member States to decide that a lower percentage may be evidence of ownership or control ; (ii) if there is any doubt that the person identified in point (i) is the beneficial owner or if after taking all the necessary measures no person can be identified in point (i) , the natural person who exercises control over the management of a legal entity through other means , which may include the senior management ; (iia) where no natural person is identified under point (i) or (ii), the natural person who holds the position of senior managing official, in which case, the obliged entities shall keep records of the actions taken in order to identify the beneficial ownership under points (i) and (ii) in order to prove the inability to identify such persons; (b) in the case of legal entities, such as foundations, and legal arrangements, such as trusts or mutuals , which administer and distribute funds: (i) the natural person who exercises control over 25 % or more of the property of a legal arrangement or entity; and (ii) where the future beneficiaries have already been determined, the natural person who is the beneficiary of 25 % or more of the property of a legal arrangement or entity; or (iii) where the individuals that benefit from the legal arrangement or entity have yet to be determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates. For beneficiaries of trusts that are designated by characteristics or by class, obliged entities shall obtain sufficient information concerning the beneficiary to satisfy itself that it will be able to establish the identity of the beneficiary at the time of the payout or when the beneficiary intends to exercise vested rights; (iiia) for trusts, the identity of the settlor, trustee, the protector (if any), the beneficiary or class of beneficiaries and any other natural person exercising ultimate effective control over the trust (including through a chain of control or ownership); [Am. 54]

(6) ‘trust or company service provider’ means any natural or legal person which by way of business provides any of the following services to third parties: (a) forming companies or other legal persons; (b) acting as or arranging for another person to act as a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons; (c) providing a registered office, business address, correspondence or administrative address and other related services for a company, a partnership or any other legal person or arrangement; (d) acting as or arranging for another person to act as a trustee of an express trust or a similar legal arrangement; (e) acting as or arranging for another person to act as a nominee shareholder for another person other than a company listed on a regulated market that is subject to disclosure requirements in conformity with Union law or subject to equivalent international standards;

(7) (a) ‘foreign politically exposed persons’ means natural persons who are or have been entrusted with a prominent public function by a third country; (b) ‘domestic politically exposed persons’ means natural persons who are or who have been entrusted by a the Member State with a prominent public function; [Am. 55; Am. does not concern all languages] (c) ‘persons who are or who have been entrusted with a prominent function by an international organisation’ means directors, deputy directors and members of the board or equivalent function of an international organisation; (d) ‘natural persons who are or have been entrusted with a prominent public function’ include the following: (i) heads of State, heads of government, ministers and deputy or assistant ministers; (ii) members of parliaments or similar legislative bodies ; [Am. 56] (iii) members of supreme courts, of constitutional courts or of other high-level judicial bodies whose decisions are not subject to further appeal, except in exceptional circumstances; (iv) members of courts of auditors or of the boards of central banks; (v) ambassadors, chargés d'affaires and high-ranking officers in the armed forces; (vi) senior members of the administrative, management or supervisory bodies of State owned enterprises. [Am. 57] None of the categories set out in points (i) to (vi) shall be understood as covering middle-ranking or more junior officials; (e) ‘family members’ means: (i) the spouse; (ii) any partner considered to be equivalent to the spouse; (iii) the children and their spouses or partners; [Am. 58] (iv) the parents; [Am. 59] (f) ‘persons known to be close associates’ means: [Am. 87] (i) any natural person who is known to have joint beneficial ownership of legal entities or legal arrangements, or any other close business relations, with a person referred to in points (7)(a) to (d); (ii) any natural person who has sole beneficial ownership of a legal entity or legal arrangement which is known to have been set up for the benefit de facto of the person referred to in points (7)(a) to (d); [Am. 60]

(8) ‘senior management’ means an officer or employee with sufficient knowledge of the institution's money laundering and terrorist financing risk exposure and sufficient seniority to make decisions affecting its risk exposure. It need not, in all cases, involve a member of the board of directors;

(9) ‘business relationship’ means a business, professional or commercial relationship which is connected with the professional activities of the obliged entities and which is expected, at the time when the contact is established, to have an element of duration;

(10) ‘gambling services’ means any service which involves wagering a stake with monetary value in games of chance including those with an element of skill such as lotteries, casino games, poker games and betting transactions that are provided at a physical location, or by any means at a distance, by electronic means or any other technology for facilitating communication, and at the individual request of a recipient of services;

(10a) ‘betting transaction’ means all the stages in the commercial relationship between, on the one hand, the gambling service provider and, on the other, the customer and the beneficiary of the registration of the bet and the stake until the payout of any winnings; [Am. 61]

(11) ‘group’ means group as defined in Article 2(12) of Directive 2002/87/EC of the European Parliament and of the Council (30);

(11a) ‘non-face-to-face’, means concluding a contract or carrying out a transaction, where the contractor or intermediary and the consumer are not simultaneously physically present, by exclusive means of the internet, telemarketing or other electronic means of communication up to and including the time at which the contract is concluded or the transaction is carried out. [Am. 62]

Article 4

1. Member States shall , in accordance with the risk-based approach, ensure that the provisions of this Directive are extended in whole or in part to professions and to categories of undertakings, other than the obliged entities referred to in Article 2(1), which engage in activities which are particularly likely to be used for money laundering or terrorist financing purposes. [Am. 63]

2. Where a Member State decides to extend the provisions of this Directive to professions and to categories of undertakings other than those referred to in Article 2(1), it shall inform the Commission thereof.

Article 5

The Member States may adopt or retain in force stricter provisions in the field covered by this Directive to prevent money laundering and terrorist financing , provided that such provisions are in full compliance with Union law, especially as regards Union data protection rules and the protection of fundamental rights as enshrined in the Charter. Such provisions shall not unduly prevent consumers from accessing financial services and shall not constitute an obstacle to the functioning of the internal market . [Am. 64]

SECTION 2

RISK ASSESSMENT

Article 6

1. The Commission shall conduct an assessment on the money laundering and terrorist financing risks affecting the internal market, with particular reference to cross-border activities. To that end, the Commission shall consult the Member States, the ESAs shall provide a joint opinion on the money laundering and terrorist financing risks affecting the internal market , the European Data Protection Supervisor, the Article 29 Working Party, Europol and other relevant authorities .

The risk assessment referred to in the first subparagraph shall cover at least the following:

(a) the overall extent of money laundering and the areas of the internal market that are at greater risk;

(b) the risks associated with each relevant sector, in particular the non-financial sectors and the gambling sector;

(c) the most widespread means used by criminals to launder illicit proceeds;

(d) the recommendations to the competent authorities on the effective deployment of resources;

(e) the role of EUR banknotes in criminal activities and money laundering.

The risk assessment shall also include proposals for minimum standards for risk assessments to be conducted by competent national authorities. Those minimum standards shall be developed in cooperation with Member States and shall involve the industry and other relevant stakeholders through public consultations and private stakeholders meetings as appropriate.

The Commission shall issue theopinion risk assessment by … (*1) and shall update it a biannual basis or more frequently if appropriate .

2. The Commission shall make the opinion risk assessment available to assist Member States and obliged entities to identify, manage and mitigate the risk of money laundering and terrorist financing , and to allow other stakeholders, including national legislators, the European Parliament, the ESAs, Europol and the Committee of Union FIUs, to better understand the risks. A summary of the assessment shall be publicly available. That summary shall not contain classified information .

2a. The Commission shall submit an annual report to the European Parliament and to the Council on the findings resulting from the regular risk assessments and the action taken based on those findings . [Am. 65]

Article 6a

1. Without prejudice to the infringement proceedings provided for in the TFEU, the Commission shall ensure that national law to combat money laundering and terrorist financing, adopted by Member States pursuant to this Directive is implemented effectively and is consistent with the European framework.

2. For the application of paragraph 1, the Commission shall be assisted, where appropriate, by the ESAs, Europol, the Committee of Union FIUs, and any other competent European authority.

3. Assessments of national law combat money laundering and terrorist financing provided for in paragraph 1 shall be without prejudice to those conducted by the Financial Action Task Force or Moneyval. [Am. 66]

Article 7

1. Each Member State shall take appropriate steps to identify, assess, understand and mitigate the money laundering and terrorist financing risks affecting it, as well as any data protection concerns in that regard, and keep the assessment up-to-date.

2. Each Member State shall designate an authority to coordinate the national response to the risks referred to in paragraph 1. The identity of that authority shall be notified to the Commission, the ESAs, Europol and other Member States.

3. In carrying out the assessments referred to in paragraph 1, Member States may shall make use of the opinion risk assessment referred to in Article 6(1).

4. Each Member State shall carry out the assessment referred to in paragraph 1 and:

(a) use the assessment(s) to improve its anti-money laundering and combating terrorist financing regime, in particular by identifying any areas where obliged entities shall apply enhanced measures and, where appropriate, specifying the measures to be taken;

(aa) identify, where appropriate, sectors or areas of negligible, lower or greater risk of money laundering and terrorist financing;

(b) use the assessment(s) to assist it in the allocation and prioritisation of resources to combat money laundering and terrorist financing;

(ba) use the assessment(s) to ensure that appropriate rules are drawn up for each sector or area, in accordance with the risk of money laundering;

(c) make appropriate information available in a timely manner to obliged entities to enable them to carry outout their own money laundering and terrorist financing risk assessments.

5. Member States shall make the results of their risk assessments available to the other Member States, the Commission, and the ESAs upon request. A summary of the assessment shall be made publicly available. That summary shall not contain classified information. [Am. 67]

Article 8

1. Member States shall ensure that obliged entities take appropriate steps to identify and assess their money laundering and terrorist financing risks taking into account risk factors including customers, countries or geographic areas, products, services, transactions or delivery channels. Those steps shall be proportionate to the nature and size of the obliged entities.

2. The assessments referred to in paragraph 1 shall be documented, kept up to date and be made available upon request to competent authorities and self-regulatory bodies. [Am. 68]

3. Member States shall ensure that obliged entities have policies, controls and procedures to mitigate and manage effectively the money laundering and terrorist financing risks identified at Union level, Member State level, and at the level of obliged entities. Policies, controls and procedures should be proportionate to the nature and size of those obliged entities and the risk of money laundering and terrorist financing and should respect data protection rules . [Am. 69]

4. The policies and procedures referred to in paragraph 3 shall at least include:

(a) the development of internal policies, procedures and controls, including model risk management practices, customer due diligence, reporting, record keeping, internal control, compliance management (including, when appropriate to the size and nature of the business, the appointment of a compliance officer at management level) and employee screening. Those measures shall not allow the obliged entities to ask consumers to provide more personal data than necessary ; [Am. 70]

(b) when appropriate with regard to the size and nature of the business, an independent audit function to test internal policies, procedures and controls referred to in point (a).

5. Member States shall require obliged entities to obtain approval from senior management for the policies and procedures they put in place, and shall monitor and enhance the measures taken, where appropriate.

Article 8a

1. In order to develop a common approach and common policies against non-cooperative jurisdictions with deficiencies in the field of combating money laundering, Member States shall periodically endorse and adopt the lists of countries published by the FATF.

2. The Commission shall coordinate preparatory work at the Union level on the identification of third countries with grave strategic deficiencies in their money laundering systems that pose significant risks to the financial system of the Union, taking into account the criteria set out in point (3) of Annex III.

3. The Commission shall be empowered to adopt delegated acts in order to establish a list of countries as defined in paragraph 2.

4. The Commission shall monitor on a regular basis the evolution of the situation in the countries defined in paragraph 2 of this Article on the basis of criteria set out in point (3) of Annex III and, where appropriate, shall review the list referred to in paragraph 3 of this Article. [Am. 71]

CHAPTER II

CUSTOMER DUE DILIGENCE

SECTION 1

GENERAL PROVISIONS

Article 9

Member States shall prohibit their credit and financial institutions from keeping anonymous accounts or, anonymous passbooks or from issuing anonymous electronic payment cards which do not meet the conditions laid down in Article 10a . Member States shall in all cases require that the owners and beneficiaries of existing anonymous accounts or, anonymous passbooks or anonymous payment cards be made the subject of customer due diligence measures as soon as possible and in any event before such accounts or passbooks are used in any way. [Am. 72]

Article 10

Member States shall ensure that obliged entities apply customer due diligence measures in the following cases:

(a) when establishing a business relationship;

(b) when carrying out occasional transactions amounting to EUR 15 000 or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked;

(c) for natural or legal persons trading in goods, when carrying out occasional transactions in cash amounting to EUR 7 500 or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked;

(d) for providers of gambling services casinos , when carrying out occasional transactions amounting to EUR 2 000 or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked;

(da) for on-line gambling when establishing the business relationship;

(db) for other providers of gambling services, when paying out winnings of EUR 2 000 or more; [Am. 73]

(e) when there is a suspicion of money laundering or terrorist financing, regardless of any derogation, exemption or threshold;

(f) when there are doubts about the veracity or adequacy of previously obtained customer identification data;

(fa) when a company is established. [Am. 74]

Article 10a

1. Member States may, on the basis of proven low risk, apply exemptions to obliged entities from customer due diligence with respect to electronic money as defined in Article 2(2) of Directive 2009/110/EC of the European Parliament and of the Council (31) , if the following conditions are met:

(a) the payment instrument is not reloadable;

(b) the maximum amount stored electronically does not exceed EUR 250; Member States may increase this limit up to EUR 500 for payment instruments that can only be used in that one particular Member State;

(c) the payment instrument is used exclusively to purchase goods or services;

(d) the payment instrument cannot be funded with electronic money;

(e) redemption in cash and cash withdrawal are forbidden unless identification and verification of the identity of the holder, adequate and appropriate policies and procedures on redemption in cash and cash withdrawal, and record keeping obligations are performed.

2. Member States shall ensure that customer due diligence measures are always applied before redemption of the monetary value of the electronic money exceeding EUR 250.

3. This Article shall not prevent Member States from allowing obliged entities to apply simplified customer due diligence measures in respect of electronic money in accordance with Article 13 of this Directive if the conditions laid down in this Article are not met. [Am. 75]

Article 11

1. Customer due diligence measures shall comprise:

(a) identifying the customer and verifying the customer's identity on the basis of documents, data or information obtained from a reliable and independent source;

(b) identifying in addition to the identification of the beneficial owner and listed in a register pursuant to Article 29, taking reasonable measures to verify the beneficial owner’s identity to the satisfaction of the institution or person covered by this Directive, including, as regards legal persons, trusts , foundations, mutuals, holdings and all other similar existing or future legal arrangements, taking reasonable all necessary measures to understand the ownership and control structure of the customer , assessing and, as appropriate, obtaining information on the purpose and intended nature of the business relationship ;

(c) assessing and, as appropriate, obtaining information on the purpose and intended nature of the business relationship;

(d) conducting ongoing monitoring of the business relationship including scrutiny of transactions undertaken throughout the course of that relationship to ensure that the transactions being conducted are consistent with the institution's or person's knowledge of the customer, the business and risk profile, including, where necessary, the source of funds and ensuring that the documents, data or information held are kept up to date. [Am. 76]

1a. When performing the measures referred to in points (a) and (b) of paragraph 1, obliged entities shall also be required to verify that any person purporting to act on behalf of the customer is so authorised to do so and shall be required to identify and verify the identity of that person. [Am. 77]

2. Member States shall ensure that obliged entities apply each of the customer due diligence requirements set out in paragraph 1, but may determine the extent of such measures on a risk-sensitive basis.

3. When assessing money laundering and terrorist financing risks, Member States shall require obliged entities to take into account at least the variables set out in Annex I.

4. Member States shall ensure that obliged entities are able to demonstrate to competent authorities or self-regulatory bodies that the measures are appropriate in view of the risks of money laundering and terrorist financing that have been identified.

5. For life or other investment-related insurance business, Member States shall ensure that financial institutions shall, in addition to the customer due diligence measures required for the customer and the beneficial owner, conduct the following customer due diligence measures on the beneficiaries of life insurance and other investment related insurance policies, as soon as the beneficiaries are identified or designated:

(a) for beneficiaries that are identified as specifically named natural or legal persons or legal arrangements, taking the name of the person;

(b) for beneficiaries that are designated by characteristics or by class or by other means, obtaining sufficient information concerning those beneficiaries to satisfy the financial institution that it will be able to establish the identity of the beneficiary at the time of the payout.

For both the cases referred to in points (a) and (b) of the first subparagraph, the verification of the identity of the beneficiaries shall occur at the time of the payout. In the case of assignment, in whole or in part, of the life or other investment related insurance to a third party, financial institutions aware of the assignment shall identify the beneficial owner at the time of the assignment to the natural or legal person or legal arrangement receiving for own benefit the value of the policy assigned.

Article 12

1. Member States shall require that the verification of the identity of the customer and the beneficial owner takes place before the establishment of a business relationship or the carrying out of the transaction.

2. By way of derogation from paragraph 1, Member States may allow the verification of the identity of the customer and the beneficial owner to be completed during the establishment of a business relationship or during the execution of the transaction for entities subject to the obligations referred to in Article 2(1) and, in any event, at the time when any winnings are paid out, if this is necessary not to interrupt the normal conduct of business and where there is little risk of money laundering or terrorist financing occurring. In such situations those procedures shall be completed as soon as practicable after the initial contact. [Am. 78]

3. By way of derogation from paragraphs 1 and 2, Member States may allow the opening of a bank account provided that there are adequate safeguards in place to ensure that transactions are not carried out by the customer or on its behalf until full compliance with paragraphs 1 and 2 is obtained.

4. Member States shall require that, where the institution or person concerned is unable to comply with points (a), (b) and (c) of Article 11(1), it shall not carry out a transaction through a bank account, establish a business relationship or carry out the transaction, and shall consider terminating the business relationship and making a suspicious transaction report to the FIU in accordance with Article 32 in relation to the customer.

Member States shall not apply the previous subparagraph to, notaries, other independent legal professionals, auditors, external accountants and tax advisors only to the strict extent that such an exemption relates to ascertaining the legal position for their client or performing their task of defending or representing that client in, or concerning judicial proceedings, including advice on instituting or avoiding proceedings.

5. Member States shall require that obliged entities apply the customer due diligence procedures not only to all new customers but also at appropriate times to existing customers on a risk-sensitive basis, including at times when the relevant circumstances of a customer change.

SECTION 2

SIMPLIFIED CUSTOMER DUE DILIGENCE

Article 13

1. Where a Member State or an obliged entity identifies areas of lower risk, that Member State may allow obliged entities to apply simplified customer due diligence measures.

2. Before applying simplified customer due diligence measures obliged entities shall ascertain that the customer relationship or transaction presents a lower degree of risk.

3. Member States shall ensure that obliged entities carry out sufficient monitoring of the transaction transactions or business relationship relationships to enable the detection of unusual or suspicious transactions. [Am. 79]

Article 14

When assessing the money laundering and terrorist financing risks relating to types of customers, countries or geographic areas, and particular products, services, transactions or delivery channels, Member States and obliged entities shall take into account at least the factors of relating to customer and product, service, transaction or delivery channel as potentially lower risk situations set out in Annex II. [Am. 80]

Article 15

The ESAs shall, by … (*2), issue guidelines addressed to competent authorities and the obliged entities referred to in Article 2(1)(1) and (2) in accordance with Article 16 of Regulation (EU) No 1093/2010, of Regulation (EU) No 1094/2010, and of Regulation (EU) No 1095/2010, on the risk factors to be taken into consideration and/or the measures to be taken in situations where simplified due diligence measures are appropriate. Specific account should be taken of the nature and size of the business, and where appropriate and proportionate, specific measures should be laid down. [Am. 81]

SECTION 3

ENHANCED CUSTOMER DUE DILIGENCE

Article 16

1. In cases identified in Articles 17 to 23 of this Directive and in other cases of higher risk that are identified by Member States or obliged entities, Member States shall require obliged entities to apply enhanced customer due diligence measures to manage and mitigate those risks appropriately.

2. Member States shall require obliged entities to examine, as far as reasonably possible, the background and purpose of all complex, unusual large transactions, and all unusual patterns of transactions, which have no apparent economic or lawful purpose , or which constitute tax offences within the meaning of Article 3(4)(f) . In particular, they shall increase the degree and nature of monitoring of the business relationship, in order to determine whether those transactions or activities appear unusual or suspicious. Where an obliged entity determines such an unusual or suspicious transaction or activity, it shall, without delay, inform the FIUs of all Member States that might be concerned. [Am. 82]

3. When assessing the money laundering and terrorist financing risks, Member States and obliged entities shall take into account at least the factors of relating to customer and product, service, transaction or delivery channel as potentially higher-risk situations set out in Annex III. [Am. 83]

4. The ESAs shall, by … (*3), issue guidelines addressed to competent authorities and the obliged entities referred to Article 2(1)(1) and (2) in accordance with Article 16 of Regulation (EU) No 1093/2010, of Regulation (EU) No 1094/2010, and of Regulation (EU) No 1095/2010 on the risk factors to be taken into consideration and/or the measures to be taken in situations where enhanced due diligence measures need to be applied. [Am. 84]

Article 17

In respect of cross-border correspondent banking relationships with respondent institutions from third countries, Member States shall, in addition to the customer due diligence measures as set out in Article 11, require their credit institutions to:

(a) gather sufficient information about a respondent institution to understand fully the nature of the respondent's business and to determine from publicly available information the reputation of the institution and the quality of supervision;

(b) assess the respondent institution's anti-money laundering and anti-terrorist financing controls;

(c) obtain approval from senior management before establishing new correspondent banking relationships;

(d) document the respective responsibilities of each institution;

(e) with respect to payable-through accounts, be satisfied that the respondent credit institution has verified the identity of and performed ongoing due diligence on the customers having direct access to accounts of the correspondent and that it is able to provide relevant customer due diligence data to the correspondent institution, upon request.

Article 18

In respect of transactions or business relationships with foreign politically exposed persons, Member States shall, in addition to the customer due diligence measures set out in Article 11, require obliged entities to:

(a) have appropriate risk-based procedures to determine whether the customer or the beneficial owner of the customer is such a person;

(b) obtain senior management approval for establishing or continuing business relationships with such customers;

(c) take adequate measures to establish the source of wealth and source of funds that are involved in the business relationship or transaction;

(d) conduct enhanced ongoing monitoring of the business relationship.

Article 19

In respect of transactions or business relationships with domestic politically exposed persons or persons who are or who have been entrusted with a prominent function by an international organisation, Member States shall, in addition to the customer due diligence measures set out in Article 11, require obliged entities:

(a) to have appropriate risk-based procedures to determine whether the customer or the beneficial owner of the customer is such a person;

(b) in cases of higher risk business relationships with such persons, to apply the measures referred to in points (b), (c) and (d) of Article 18.

Article 19a

The Commission, in cooperation with Member States and international organisations, shall draw a list of domestic politically exposed persons and persons resident in a Member State who are or who have been entrusted with a prominent function by an international organisation. The list shall be accessible by competent authorities and by obliged entities.

The Commission shall notify the persons concerned that they have been placed on or removed from the list.

The requirements in this Article shall not exempt obliged entities from their customer due diligence obligations, and obliged entities shall not rely exclusively on that information as sufficient to fulfil those obligations.

Member States shall take all appropriate measures to prevent the trade of information for commercial purposes on foreign politically exposed persons, domestic politically exposed persons, or persons who are or who have been entrusted with a prominent function by an international organisation. [Am. 85]

Article 20

Obliged entities shall take reasonable measures , in accordance with the risk-based approach, to determine whether the beneficiaries of a life or other investment related insurance policy and/or, where required, the beneficial owner of the beneficiary are politically exposed persons. Those measures shall be taken at the latest at the time of the payout or at the time of the assignment, in whole or in part, of the policy. Where there are higher risks identified, in addition to taking normal customer due diligence measures, Member States shall require obliged entities to: [Am. 86]

(a) inform senior management before the payout of the policy proceeds;

(b) conduct enhanced scrutiny on the whole business relationship with the policyholder.

Article 21

The measures referred to in Articles 18, 19 and 20, but not those referred to in Article 19a, shall also apply to family members or persons known to be who, as indicated by evidence, are close associates of such foreign or domestic politically exposed persons. [Am. 87]

Article 22

Where a person referred to in Articles 18, 19 and 20 has ceased to be a foreign politically exposed person, a domestic politically exposed person or a peson who is or who has been entrusted with a prominent function by an international organisation, obliged entities shall be required to consider the continuing risk posed by that person and to apply such appropriate and risk-sensitive measures until such time as that person is deemed to pose no further risk. That period of time shall not be less than 18 12 months. [Am. 88]

Article 23

1. Member States shall prohibit credit institutions from entering into or continuing a correspondent banking relationship with a shell bank and shall require that credit institutions take appropriate measures to ensure that they do not engage in or continue correspondent banking relationships with a bank that is known to permit its accounts to be used by a shell bank.

2. For the purposes of paragraph 1, ‘shell bank’ shall mean a credit institution, or an institution engaged in equivalent activities, incorporated in a jurisdiction in which it has no physical presence, involving meaningful mind and management, and which is unaffiliated with a regulated financial group.

SECTION 4

PERFORMANCE BY THIRD PARTIES

Article 24

Member States may permit the obliged entities to rely on third parties to meet the requirements laid down in Article 11(1)(a), (b) and (c). However, the ultimate responsibility for meeting those requirements shall remain with the obliged entity which relies on the third party. In addition, Member States shall ensure that any such third parties may also be held liable for breaches of national provisions adopted pursuant to this Directive. [Am. 89]

Article 25

1. For the purposes of this Section, ‘third parties’ shall mean:

(a) obliged entities who are listed in Article 2; or

(b) other institutions and persons situated in Member States or a third country, who apply customer due diligence requirements and record keeping requirements equivalent to those laid down in this Directive and their compliance with the requirements of this Directive is supervised in accordance with Section 2 of Chapter VI.

2. The Member States Commission shall consider information available on the level of geographical risk when deciding if a third country meets the conditions laid down in paragraph 1 and shall inform each other, the Commission Member States, the obliged entities and the ESAs to the extent relevant for the purposes of this Directive and in accordance with the relevant provisions of Regulation (EU) No 1093/2010, of Regulation (EU) No 1094/2010, and of Regulation (EU) No 1095/2010, of cases where they consider that a third country meets such conditions.

2a. The Commission shall provide a list of jurisdictions having anti-money laundering measures equivalent to provisions of this Directive and other related rules and regulations of the Union.

2b. The list referred to in paragraph 2a shall be regularly reviewed and updated according to the information received from Member States pursuant to paragraph 2. [Am. 90]

Article 26

1. Member States shall ensure that obliged entities obtain from the third party being relied upon the necessary information concerning the requirements laid down in Article 11(1)(a), (b) and (c).

2. Member States shall ensure that obliged entities to which the customer is being referred take adequate steps to ensure that relevant copies of identification and verification data and other relevant documentation on the identity of the customer or the beneficial owner are immediately forwarded, on request, by the third party.

Article 27

1. Member States shall ensure that the home competent authority (for group-wide policies and controls) and the host competent authority (for branches and subsidiaries) may consider that an obliged entity applies the measures contained in Article 25(1) and Article 26 through its group programme, where the following conditions are met:

(a) an obliged entity relies on information provided by a third party that is part of the same group;

(b) that group applies customer due diligence measures, rules on record keeping and programmes against money laundering and terrorist financing in accordance with this Directive or equivalent rules;

(c) the effective implementation of requirements referred to in point (b) is supervised at group level by a home competent authority in cooperation with host competent authorities . [Am. 91]

1a. The ESAs shall, by … (*4) , issue guidelines on the implementation of the supervisory regime by the competent authorities in the relevant Member States for group entities to ensure coherent and effective group level supervision. [Am. 92]

Article 28

This Section shall not apply to outsourcing or agency relationships where, on the basis of a contractual arrangement, the outsourcing service provider or agent is to be regarded as part of the obliged entity.

CHAPTER III

BENEFICIAL OWNERSHIP INFORMATION

Article 29

1. Member States shall ensure that corporate or companies and other entities having legal personality, including trusts or entities with a similar structure or function to trusts, foundations, holdings and all other similar, in terms of structure or function, existing or future legal arrangements established or incorporated within their territory , or governed under their law obtain and, hold and transmit to a public central register, commercial register or companies register within their territory adequate, accurate and, current and up-to-date information on them and on their beneficial ownership , at the moment of establishment as well as any changes thereof.

1a. The register shall contain the minimum information to clearly identify the company and its beneficial owner, namely the name, number, legal form and status of the entity, proof of incorporation, address of the registered office (and of the principal place of business if different from the registered office), the basic regulatory powers (such as those contained in the Memorandum and Articles of Association), the list of directors (including their nationality and date of birth) and shareholder/beneficial owner information, such as the names, dates of birth, nationality or jurisdiction of incorporation, contact details, number of shares, categories of shares (including the nature of the associated voting rights) and proportion of shareholding or control, if applicable.

The requirements stipulated in this Article shall not exempt obliged entities from their customer due diligence obligations, and obliged entities shall not rely exclusively on that information as sufficient to fulfil those obligations.

1b. Regarding trusts or other types of legal entities and arrangements, existing or future, with a similar structure or function, the information shall include the identity of the settlor, of the trustee(s), of the protector (if relevant), of the beneficiaries or class of beneficiaries, and of any other natural person exercising effective control over the trust. Member States shall ensure that trustees disclose their status to obliged entities when, as a trustee, the trustee forms a business relationship or carries out an occasional transaction above the threshold set out in points (b), (c) and (d) of Article 10. The information held should include the date of birth and nationality of all individuals. Member States shall follow the risk-based approach when publishing the trust deed and letter of wishes and shall ensure where applicable and while respecting the protection of personal information that information is disclosed to competent authorities, in particular to FIUs, and to obliged entities.

2. Member States shall ensure that The information referred to in paragraph paragraphs 1 , 1a and 1b can be accessed shall be accessible by competent authorities, in particular by FIUs, and by obliged entities of all Member States in a timely manner by competent authorities and by obliged entities. Member States shall make the registers referred to in paragraph 1 publicly available following prior identification of the person wishing to access the information through basic online registration. The information shall be available online to all persons in an open and secure data format, in line with data protection rules, in particular as regards the effective protection of the rights of the data subject to access personal data and the rectification or deletion of inaccurate data. The fees charged for obtaining the information shall not exceed the administrative costs thereof. Any changes to the information displayed shall be clearly indicated in the register without delay and in any event within 30 days.

The company registers referred to in paragraph 1 of this Article shall be interconnected by means of the European platform, the portal and optional access points established by the Member States pursuant to Directive 2012/17/EU. Member States, with the support of the Commission, shall ensure that their registers are interoperable within the system of register networking through the European platform.

2a. The Commission, in cooperation with Member States, shall rapidly, constructively and effectively seek cooperation with third countries to encourage that equivalent central registers containing beneficial ownership information are established and information referred to in paragraphs 1 and 1a of this Article in their countries is made publically accessible.

Priority shall be given to third countries that host a significant number of corporate or legal entities, including trusts, foundations, holdings and all other bodies that are similar in terms of structure or function and that hold shares indicating direct ownership pursuant to Article 3(5) in corporate or legal entities established in the Union.

2b. Member States shall lay down the rules on effective, proportionate and dissuasive penalties for natural or legal persons applicable to infringements of the national provisions adopted pursuant to this Article and shall take all measures necessary to ensure that such penalties are applied. For the purposes of this Article, Member States shall establish effective anti-abuse measures with view to preventing misuse based on bearer shares and bearer share warrants.

2c. The Commission shall, by … (*5) , submit to the European Parliament and to the Council a report on the application and mode of functioning of the requirements pursuant to this Article, if appropriate, accompanied, where appropriate by a legislative proposal. [Am. 93]

Article 30

1. Member States shall ensure that trustees of any express trust governed under their law obtain and hold adequate, accurate and current information on beneficial ownership regarding the trust. This information shall include the identity of the settlor, of the trustee(s), of the protector (if relevant), of the beneficiaries or class of beneficiaries, and of any other natural person exercising effective control over the trust.

2. Member States shall ensure that trustees disclose their status to obliged entities when, as a trustee, the trustee forms a business relationship or carries out an occasional transaction above the threshold set out in points (b), (c) and (d) of Article 10.

3. Member States shall ensure that the information referred to in paragraph 1 of this Article can be accessed in a timely manner by competent authorities and by obliged entities.

4. Member States shall ensure that measures corresponding to those in paragraphs 1, 2 and 3 apply to other types of legal entity and arrangement with a similar structure and function to trusts. [Am. 94]

CHAPTER IV

REPORTING OBLIGATIONS

SECTION 1

GENERAL PROVISIONS

Article 31

1. Each Member State shall establish an FIU in order to prevent, detect and investigate money laundering and terrorist financing.

1a. The persons referred to in Article 2(1)(3)(a), (b), and (d), shall inform the FIU and/or the appropriate self-regulatory body of the profession concerned, as referred to in Article 33(1), if they suspect, or have reasonable grounds to suspect that their services are being misused for the purpose of criminal activity. [Am. 95]

2. Member States shall notify the Commission in writing of the name and address of the respective FIUs.

3. The FIU shall be established as a an operationally independent and autonomous central national unit. It shall be responsible for receiving (and to the extent permitted, requesting), analysing and suspic