WRITTEN QUESTION P-2637/01

by Toine Manders (ELDR) to the Commission

(21 September 2001)

Subject: Banking secrecy

As a result of their banking secrecy, a number of countries both within and outside the European Union are making it possible for criminals, terrorists and/or dictators to deposit funds obtained through criminal activities and to benefit from the growth of those funds. This may be harming the EU as a consequence of the loss of tax revenue and the outflow of currency. Even intelligence services and tax authorities have no, or very little, access to information concerning account holders.

The terrorist attacks in the US have shown that banking secrecy can have even more far-reaching consequences. Evidently, there is even a link between banking secrecy and terrorism.

International terrorism and attacks on the scale of acts of war as perpetrated in the US are only possible by virtue of a vast and intricate organisation and, furthermore, a great deal of money.

It is self-evident that, as a result of banking secrecy, it is possible for a terrorist organisation to find a safe place in tax havens to put its money money obtained by criminal means and black money and even to benefit from the growth thereof.

It is unthinkable that EU Member States should be allowing banks inadvertently to facilitate the activities of terrorists and/or criminals.

In my opinion, countries which apply the principle of banking secrecy too rigidly are indirectly assisting criminal organisations, which would be unable to operate if they did not have a great deal of money in a safe and anonymous place.

Reference may be made to unfair competition vis-à-vis banks which hold only money obtained by lawful means. Reference may also be made (perhaps in an indirect way) to protection of consumers who use the services of banks and who may be exposed to risks as a consequence of the abovementioned unlawful actions.

Can sanctions, such as fines or economic blockades, be imposed on Member States and even on countries outside the European Union which, as a consequence of their banking secrecy, accept money obtained by criminal means and, in so doing, facilitate the actions of criminals and/or terrorists?

If so, what sanctions may be imposed, and when?

If not, can the Commission, and does it intend to, submit proposals to enable sanctions to be imposed in future?

Answer given by Mr Bolkestein on behalf of the Commission

(17 October 2001)

The Commission, together with the Member States, is looking into a range of possibilities to deny criminals, and notably terrorists, the funding of their activities.

At present, under the European anti-money laundering directive(1), banks and other financial institutions must lift banking secrecy where there is an indication of money laundering and report their suspicions to the competent authorities. The range of criminal activity covered by this reporting obligation differs from one Member State to another, but will be considerably extended by the proposal for a second directive, which is currently in the conciliation procedure.

The Commission does not therefore accept that the practice of banking secrecy creates a welcoming environment for criminal or terrorist money within the Union.

At the wider international level the fight against money laundering is led by the Financial Action Task Force on Money Laundering (FATF), in which all the Member States and the Commission participate. For several years now, the FATF has been conducting an exercise to identify and name countries and territories which do not cooperate adequately in international efforts to combat criminal money, for example by maintaining excessive banking secrecy or denying judicial cooperation. The FATF has already called on its member countries to instruct their banks and financial institutions to pay particular attention to financial transactions involving a number of such countries. Their response has generally been positive and remedial action has already been taken in a number of these countries. For countries that do not respond adequately, the FATF members are prepared to apply further countermeasures.

A coordinated response of the Member States to countermeasures decided on by the FATF will again be discussed at the Joint Economic and Financial Affairs/Justice and Home Affairs (Ecofin/JAI) Council on 16 October 2001.

Full details of the FATF initiative and the countries in question can be found on the FATF website: http://www. oecd. org/fatf.

(1) Council Directive 91/308/EEC of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering, OJ L 166, 28.6.1991.