Second Commission report to the European Parliament and the Council on the implementation of the Money Laundering Directive
Date: 1998-07-01
Institutions: European Commission
Subjects: credit institution, economic offence, financial institution, financial market, money laundering

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 01.07.1998 
COM(1998) 401 final 

SECOND COMMISSION  REPORT 

to the EUROPEAN  PARLIAMENT  and the  COUNCIL 

on the implementation of the Money Laundering Directive 

SUMMARY 

This  is the  second  Commission  report  to the Council  and  the  European  Parliament  on  the 
implementation  of  the  1991  Money  Laundering  Directive.  It  seeks  to  respond  to  the 
concerns  and  requests  raised  by  these  two  institutions  in the  context  of their  examination 
of the Commission's  first  report presented  in  1995. 

Given  the  global  nature of the  money  laundering  problem  this  second  report  first  seeks  to 
situate  the  European  Union's  anti-money  laundering  effort  within  the  wider  international 
context.  It thus  reports  on  the  efforts  undertaken  to  spread  the  message  to  third  countries 
and  also  records  the  considerable  progress  made  in  the  ratification  of  the  two  major 
international  money  laundering  conventions. 

The  basic  situation  as  regards  implementation  of  the  Directive  is  very  satisfactory.  All  of 
the  Member  States  have  implemented  the  Directive  in  their  national  legislation  and  only 
one infringement  procedure  is currently  open. 

The  report  notes  the  excellent  progress  made  by  all  the  Member  States  towards  the 
criminalisation  of 
the  laundering  of  the  proceeds  of  a  much  wider  range  of  serious 
offences. 

It  examines  the  efforts  to  combat  money  laundering  via  bureaux  de  change  and  other, 
possibly  unregulated,  financial  activities.  It  also  notes  progress  in  the  range  of  non-
financial  activities  made  subject  to  the  Member  States'  money  laundering  legislation  and 
considers  the  question  of  the  application  of  anti-money  laundering  measures  to  certain 
non-financial  professions,  and  in particular  the  legal  professions. 

In  the  above  and  a  number  of  other  areas  the  report  makes  reference  to  aspects  of  the 
detailed  Action  Plan  to  combat  organised  crime  adopted  by  the  Amsterdam  European 
Council. 

The  report  considers  the  ongoing  work  in  various  fora  to  improve  the  cooperation  and 
exchange  of 
the  various  authorities  concerned  with  money 
laundering. 

information  between 

In response  to requests  from  Parliament  the  Commission  also  reports  on  current  trends  in 
the techniques  used  by  money  launderers  and  on the work  now  being  undertaken  in  other 
fora  into the macroeconomic effects  of money  laundering. 

The  report  also  attempts  to  provide  some  initial  data  on  the  results  of  the  anti-money 
laundering  effort.  These  show that  suspicious  transaction  reports  are  being  mad :  in every 
Member  State.  The  numbers  of  reported  prosecutions  and  convictions  are  mA>.I-,  lower. 
Similarly  the amounts  of money  confiscated  appear  to be  small. 

Lastly,  tiie  report  concludes  that  it  would  now  be  appropriate  to  update  and  extend  the 
Directive  in  line  with  the  wishes  of  Parliament  and  the  recommendations  of  the  Action 
Plan  on organised  crime. 

I. INTRODUCTION 

Council  Directive  91/308/EEC  on prevention  of the  use of  the financial system  for  the 
purpose of money laundering was adopted on 10 June 1991 '. 

Article  17 of the  Directive  provides  for  regular  implementation  reports to the  European 
Parliament and the Council, to be presented at least every three years. 

The  Commission's  first  report  (COM(95)54  final)  was  presented  in  March  1995.  It 
covered  12 Member  States since the three countries which had just joined  the  European 
Union  at  that  time  were  included,  along  with  Iceland  and  Norway,  in  a parallel  report 
which  the  EFTA  Standing  Committee  had  prepared  covering  the  EFTA  countries 
belonging to the European Economic Area (EEA). 

This second report covers the  15 Member  States. The EFTA authorities have prepared  a 
parallel  report  for  the  other  countries  of  the  EEA,  namely  Iceland,  Liechtenstein  and 
Norway. 

The first report described  in detail the way in which the main provisions of the Directive 
had  been  implemented  by  the  Member  States.  It  pointed  to  the  main  difficulties  which 
they  had  encountered  and  also  sought  to  indicate  both  the  outstanding  aspects  and  the 
weak points of the European anti-money  laundering  effort. 

The report was examined  by the Council in March  1995. The Council's conclusions  form 
Annex  1  to this report. 

In its conclusions the Council  laid particular  stress on a more coordinated  application  of 
the  Directive,  including  the  range  of  criminal  offences  covered  by  the  anti-money 
laundering  law  and  the  professions  and  types  of  undertakings  outside  the  conventional 
financial  sector subject to the Directive's provisions. 

The Council also fully  agreed with the Commission that the strengthening of systems  for 
countering  money  laundering  depended  on  closer  cooperation  between  the  different 
authorities involved in fighting this phenomenon. 

Finally  the  Council  called  on  the  Commission  to  continue  its  analysis  of  the  various 
questions raised and to report back (within  18 months) on its thinking on these issues. 

The  European  Parliament  held  a  widely  based  discussion  of  money  laundering.  It 
examined  the Commission's  report  in a number of committees  and  organised  a hearing. 
Its report  and  resolution  were  adopted  in  June  19962.  Parliament's  21  point  Resolution 
forms Annex 2 to this report. 

1  OJ No L 166, 28.6.1991, p.77. 

2  Document A4-0187/96 and OJ No C  198, 8.7.1996, p.245. 

2 

Parliament  called  for  more  information  on  the  practical  results  of  the  anti-money 
laundering  effort,  on  new  money  laundering  techniques  being  used  and  on  the  macro-
economic  effects  of  money  laundering.  It  called  for  the  money  laundering  offence  to 
apply  to the  laundering  of the proceeds  of all  organised  crime  and  wanted  the  Directive  to 
cover  directly  all  the  occupations  and  types  of  undertaking  involved  or  likely  to  be 
involved  in  money  laundering.  Parliament  called  on  the  Commission  to  report  back 
within  two  years  and  to  present  a  proposal  for  a  further  directive  to  fill  in  the  gaps  it 
perceived  in the European  Union's  anti-money  laundering  defences. 

The  purpose  of  this  report  is  to  attempt  to  respond,  within  a  single  document,  to  the 
the  Council  and  the  European  Parliament  and,  to  the  extent  possible,  to 
concerns  of 
supply  the additional  information  requested  by  Parliament. 

In  line  with  the  concerns  of  Parliament  and  the  mandate  received  from  the  Council  the 
Commission  takes  a  wide  approach  in  this  report.  It  examines  the  Union's  efforts  to 
combat  money  laundering  as  a  whole  and  does  not  necessarily  limit  its  coverage  to  the 
legislation  implementing  the  Directive  or to  matters  falling  solely  under  the  first  pillar.  It 
also seeks to place the  European  Union's  efforts  in the  international  context. 

The following  annexes  are attached  to this report : 

•  Annex  1  Conclusions  of the Council  on the Commission's  first  report 

•  Annex  2 

Resolution  of the  European  Parliament  in response  to the  first  report 

•  Annex  3 

Signature, ratification  and  implementation  of the  Vienna and  Strasbourg 
Conventions 

•  Annex  4 

Table  of  criminal  offences  covered  by  the  Member  States'  anti-money 
laundering  legislation 

•  Annex  5  Action point 26 from  the report on organised  crime presented to  and 

approved  by the Amsterdam  European  Council 

•  Annex  6  Non-financial  activities covered  by the Member  States'  anti-money 

laundering  legislation 

•  Annex  7  Conclusions  of the  Egmont  Group  regarding  the  possibilities  of 

cooperation  between  the  Member  States'  financial  intelligence  units 

•  Annex  8  Data on  suspicious transaction  reports 

•  Annex  9  Results of the reporting  system,  prosecutions  and  convictions 

II.  Th«  EUROPEAN  UNION'S  ANTI-MONEY  LAUNDERING  EFFORT  in  the 
GLOBAL CONTEXT 

1. General 

The  drugs  trade  and  organised  crime  are  highly  international  and  take  little  account  of 
frontiers.  Equally  the  laundering  of  the  proceeds  of  serious  crime  is  increasingly  an 
international  phenomenon  with  launderers  ready  and  able  to  exploit  opportunities  and 
weaknesses  in  States'  defences  anywhere  in  the  world.  The  fight  against  money 
laundering  has  to  be  seen  in  global  terms.  However  sophisticated  and  advanced  the 
systems put in place by the countries of the European  Union may be, they  can easily  be 
undermined  by the absence  of or  gaps  in the defences  of other  countries.  It  is  therefore 
imperative  that  the  anti-money  laundering  message  be  delivered  and  be  heard  in  every 
country of the world. 

The  international  fight  ag linst  money  laundering  is  led  by  the  Financial  Action  Task 
Force (FATF). This body, which was created by the G7 Summit in  1989, currently has 28 
members,  26  country  members,  representing  the  world's  major  financial  markets,  plus 
the European Commission  and the Gulf Cooperation  Council. All of the  15 EU  Member 
States are members of the FATF. 

The  FATF  adopted  its 40  Recommendations  in  1990 and  updated  them  in  1996.  These 
are  the  measures,  covering  the  areas  of  criminal  justice  and  law  enforcement,  the 
financial  system  and  its  regulation  and  international  cooperation,  which  the  FATF 
members have agreed to implement and which all countries are encouraged to adopt. 

The FATF has now decided that its work must continue after  its current mandate  expires 
in mid-1999. One of its major tasks in the coming years will be to establish a world-wide 
network in order to spread the anti-money  laundering message to all regions of the globe. 
The FATF's review of its future  work and mission was approved by the FATF Ministers 
and Commissioner Monti on 28 April  1998 and by the G7/8 Summit on  15-17 May  1998. 

The United Nations system also plays a major  role in the fight against money  laundering. 
In October  1996 the  United  Nations  International  Drugs  Control  Programme  (UNDCP) 
launched  a  global  programme  against  money 
laundering  to  be  implemented  in 
cooperation  with  the  UN  Crime  Prevention  and  Criminal  Justice  Division  (CPCJD).  In 
this way the UN is  broadening its efforts  beyond the combating of the laundering of the 
proceeds derived solely from  drugs trafficking.  Indeed, the UNDCP now comes under the 
umbrella  of  the  United  Nations  Office  of  Drug  Control  and  Crime  Prevention 
(UNODCCP). The fight against money laundering will be one of the main subjects on the 
agenda of the UN General Assembly  Special Session on drugs to be held  in New York in 
June 1998. 

2. Role of the Community Directive 

The Community's  1991 money  laundering  Directive  was a landmark  in the  international 
effort  against  money  laundering  in  that  it  gave  legal  force  within  the  EU,  and 
subsequently 
in  a  majority  of  the  FATF  members,  to  a  number  of  the  40 
recommendations relating to the prevention of the misuse of the financial system. 

At the  same time  the  Directive  clearly  recognised  the  global  nature  of the problem  and 
made reference  to the two major  international  conventions relating to money  laundering, 
namely  the  United  Nations  Convention  against  illicit  traffic  in  narcotic  drugs  and 
psychotropic  substances,  Vienna,  1988,  from  which  it  took  the  definition  of  money 
laundering,  and  the  Council  of  Europe  Convention  on  laundering,  search,  seizure  and 
confiscation  of  the  proceeds  from  crime,  Strasbourg,  1990, one of  the  main  purposes  of 
which is to facilitate and promote international  cooperation. 

Two  of  the  FATF's  40  Recommendations  relate  to  the  signing  and  ratification  of  these 
two international  Conventions. 

3. Implementation  of the Vienna and Strasbourg Conventions by the Member States 

In a statement by their Government representatives  meeting within the Council  annexed 
to the Directive the Member  States undertook to enact criminal legislation enabling them 
to comply with their obligations under the Vienna and Strasbourg Conventions. 

All  of  the  Member  States  have  now  signed  and  ratified  the  Vienna  Convention  and 
implementation of the relevant anti-money  laundering articles is now complete. 

Considerable  progress has also been  made  in respect  of the  Strasbourg  Convention. The 
precise  situation  as  regards  the  signing,  ratification  and  implementation  of  this 
Convention  is  set  out  in  Annex  3.  All  of  the  Member  States  have  now  signed  the 
Convention  while  11 have  also  ratified  it. The  Action  Plan  to  combat  organised  crime3 
submitted  to  and  approved  by  the  Amsterdam  European  Council  further  commits 
Member  States  to  complete  ratification  of  this  (and  other)  international  instruments  by 
the  end  of  1998  or  provide  a  written  report  every  six  months  on  the  difficulties 
encountered. 

4.  Implementation  of  the  Directive,  or  equivalent  standards,  by  non-member 
countries 

4.1.  The countries of the European Economic Area 

The  Directive  applies  to  Iceland,  Liechtenstein  and  Norway  under  the  EEA  Agreement 
and  the  EFTA  Surveillance  Authority  has  produced  a parallel  report  on  implementation 
in those countries. 

OJ N or  251,  15.8.1 <w,  p. i 

4.2.  Central  and  Eastern  European  countries 

The money  laundering  Directive  is an integral  part of the acquis communautaire and all 
candidate countries will be required to implement it. Efforts  to assist in this process  form 
part of the pre-accession strategy. 

All  of  the  Association  Agreements  contain  an  article  committing  the  signatories  to 
combating  money  laundering  in  line  with  the  Community  and  other  international 
standards, notably those of the FATF. 

Under  the  PHARE  multi-country  programme  to  combat  drugs  the  Commission  is 
currently  involved  in  technical  assistance  efforts  in  the  field  of  anti-money  laundering 
measures in  13 countries of central and eastern Europe. 

Reference  should  also be made to action  point  3 of the Action  plan  to combat  organised 
crime which "encourages the Council and the Commission to define  in common with the 
candidate  countries  of  Central  and  Eastern  Europe,  including  the  Baltic  States,  a  pre-
accession Pact on cooperation against crime ...". 

4.3. The New Independent States 

The Partnership and Cooperation  Agreements between the EU and the New Independent 
States  (NIS)  contain  provisions  to  establish  mutual  cooperation  in  a  number  of  areas 
related  to  Justice  and  Home  Affairs,  including  money  laundering.  Following  the 
Council's  decision  to  open  up  the  TACIS  programme  to  such  actions  it  is  likely  that 
technical  assistance  projects  in  this  area  in  Central  Asian  countries  will  be  identified 
soon. 

4.4. Non-FATF members of the Council of Europe 

The  Commission  is  providing  a  financial  contribution  towards  the  Council  of  Europe 
intended  to  promote  the  extension  of  the  FATF  40 
mutual  evaluation  project 
recommendations, and the FATF procedures of self-assessment  and mutual evaluation to 
21  European  countries  not  belonging  to  the  FATF.  The  Commission  contribution  will 
help to finance the evaluation of the PHARE countries. 

4.5. The Caribbean 

In the Caribbean  area, the Commission  has launched  a major  regional  money  laundering 
control  project  in  cooperation  with  the  USA. This  project  will  be  implemented  through 
the Caribbean Financial Action Task Force (CFATF). 

4.6 Andean Community 

In  February  1998  the  five  members  of  the  Andean  Community  (Bolivia,  Colombia, 
Ecuador,  Peru  and  Venezuela)  and  the  Commission  signed  a  financial  agreement  to 
establish  a  regional  programme  for  the  fight  against  drugs,  including  an  anti-money 
laundering component. 

4.7. Asia 

In  the  context  of  the  follow-up  to the  first  ASEM  Summit  of  March  1996,  the  first  Asia-
Europe  (ASEM)  Finance  Ministers  meeting  held  in  Bangkok  in  September  1997  agreed 
"to  take  concrete  steps  to  strengthen  cooperation  between  the  EU  and  Asia  in  the  fight 
against  money  laundering".  Proposals  were  presented  to  the  ASEM  II  Summit  held  in 
London  in  April  1998  to  give  effect  to  this  agreement,  and  the  Summit  recognised  the 
impact  on  the  transparency  of  financial  systems  of  the  fight  against  money  laundering 
and  the  need  for  cooperation  between  the  ASEM  countries.  In  this  context  exploratory 
discussions  with  the  Secretariat  of  the  Asia-Pacific  Group  on  money  laundering  are 
currently  underway. 

4.8. Other  non-member  countries 

Lastly  the  Commission  continues  to  seek  to  incorporate  an  anti-money  laundering  clause 
in  all  the  agreements,  of  whatever  type,  it  concludes  with  non-member  countries.  The 
standard  clause  refers  to  efforts  and  cooperation  to  avoid  money  laundering  and  to  the 
establishment  of suitable  standards  against  money  laundering  equivalent  to those  adopted 
in the EU  and  in international  fora  such  as the  FATF. 

III.  IMPLEMENTATION  of the  DIRECTIVE  by the MEMBER  STATES 

1. General  situation 

All  of  the  Member  States  have  now  implemented  the  Money  Laundering  Directive  and 
have  officially  notified  their  implementing  legislation  to  the  Commission.  Examination 
of some  of the  implementing,  or  supplementary,  legislation  received  only  recently  is  still 
continuing. 

There  is only  one  infringement  proceeding  currently  in progress  under  Article  169 of  the 
Treaty  for  non-application  or  incorrect  application  of  the  Directive.  This  is  against 
Austria  and  concerns  in  particular  the  continued  existence  in  that  country  of  anonymous 
savings  accounts.  The  Commission  decided  in  October  1997  to  bring  this  matter  before 
the Court of Justice. 

2. The  prohibition  of money  laundering 

Article  2  of  the  Directive  provides  that  money  laundering  shall  be  "prohibited"  in  all 
Member  States. 

As explained  in the Commission's  lu  t report  it had  not  been  possible  to reach  agreement 
in  the  Council  on  a  requirement  i 
the  Directive  to  criminalise  money  laundering. 
Nonetheless  the  statement  annexed  t<  the  Directive  gave  this  commitment  (albeit  outside 
the  framework  of  the  Directive)  and  H of  the  Member  States  have  in  fact  made  money 
laundering  a criminal  offence. 

The  Directive  only  requires  the  prohibition  of  the  laundering  of  drugs  proceeds,  as 
required by the Vienna Convention, but encourages Member States to apply the approach 
of the  Strasbourg  Convention,  namely  of combating  the  laundering  of the proceeds  of a 
wider  range  of  criminal  offences  (often  referred  to  as "predicate  offences").  The  FATF 
strengthened  its  relevant  recommendation  in  1996  to  state  that  "each  country  should 
extend  the  offence  of  drug  money  laundering  to  one  based  on  serious  offences".  This 
corresponds  to  a  growing  trend  based  on  the  dramatic  increase  in  non-drugs  based 
organised  crime  and  on  the  realisation  that  having  a  wide  range  of  predicate  offences 
should  improve  suspicious  transaction  reporting  and  facilitate  international  cooperation 
between judicial and police authorities in different  countries. 

This trend  has been very  noticeable among the EU Member  States. Annex 4 provides an 
up-to-date  picture  of  the  predicate  offences  covered  by  their  anti-money  laundering 
legislation. All the Member States have or (in the case of Luxembourg) are in the process 
of extending their legislation to outlaw the laundering of the proceeds of a wide range of 
serious crime. Parliament's call to the Member  States set out in point  5 of its Resolution 
has in fact already been answered. 

This also means that the requirement  contained  in Action point  26(e) of the Action  Plan 
to  combat  organised  crime  that  "the  reporting  obligation  in  Article  6  of  the  money 
laundering  Directive  should  be  extended  to  all  offences  connected  with  serious  crime" 
has already been fulfilled  to a very large extent. 

Reference  should also be made hereto the Convention  on the protection  of the European 
Communities'  financial  interests  and  its  two  additional  Protocols.  The  Member  States 
have  undertaken  to  criminalise  the  laundering  of  the  proceeds  of  fraud  and  corruption 
within the meaning of the Convention. An essential complement to this commitment will 
be the extension to such conduct of the identification  and reporting obligations. 

Despite  the  progress  made  by  the  Member  States  in  the  coverage  of  their  anti-money 
laundering  legislation  the question  nevertheless  arises  as to whether  it  is acceptable  that 
the Directive, which remains one of the basic  international  texts in this area,  should  fail 
so clearly now to reflect the current reality. 

3. The coverage of financial  sector activities 

The  Directive  applies  to  credit  institutions  and  to  financial  institutions  in  the  widest 
sense.  Thus  virtually  all  financial-sector  intermediaries  are  subject  to  the  Directive's 
requirements. 

3.1. Bureaux de change 

Much attention has been paid to the involvement of money changing offices  (bureaux de 
change)  in the  process  of money  laundering. These  offices  do  in  fact  clearly  fall  within 
the  scope  of  the  Directive  but,  as  the  first  report  stated,  were  not  subject  to  prudential 
supervision  in  a  number  of  Member  States.  Given  the  increasing  number  of  cases  in 
which these offices  have been found  to be involved  in money  laundering, virtually  all of 
the Member States have now subjected them to some sort of official  supervision. 

The  current  situation  is that  only  two  Member  States, namely  Denmark  and  the  United 
Kingdom,  impose  no  special  requirements  on  bureaux  de  change.  However,  the  UK 
Government  has announced  that it intends to bring bureaux de change  under  supervision, 
while  Denmark  has  reported  that  it  is  currently  reviewing  the  situation.  The  other 
Member  States  either  have  a  system  of  prudential  control  or  impose  requirements  of 
registration  and  authorisation  or  a  fit-and-proper  test  for  managers  or  shareholders. 
However,  all  of  the  Member  States  have  brought  bureaux  de  change  under  their  anti-
money  laundering  legislation.  The  United  Kingdom  and  Denmark,  while  not  having  a 
particular  supervisory  regime, nonetheless report a good response  from  them  in terms of 
the number of suspicious transactions reported. 

3.2. Other financial  activities 

In its report Parliament also refers to other possibly unregulated  activities, such as money 
transmission  services,  leasing  and  factoring.  These  activities  again  fall  within  the  scope 
of the money  laundering  Directive and Member  States should ensure that  its obligations, 
such  as client  identification,  record  keeping  and  reporting  of  suspicious  transactions  are 
respected.  In  respect  of  such  undertakings  Parliament  called  on  the  Commission  to 
consider  whether  and  to what  extent  provisions  on  supervision  can  be  incorporated  into 
the Directive. 

The Commission would point out that the present Directive is not concerned directly with 
issues  and  the  imposition  of  coordinated  supervisory  or  prudential 
supervisory 
requirements  is  invariably 
linked  to  the  facilitation  of  cross-border  services  or 
establishment. Furthermore certain activities do not exist in all the Member States or may 
only be carried on by other regulated  institutions. General company  law may also provide 
certain  safeguards. 

However,  in  the  event  that  a  particular  unregulated  financial  activity  revealed  serious 
money  laundering  problems,  the  Commission  would  expect  Member  States  to  take 
appropriate  action,  as they  have  done  in the  case  of  bureaux  de  change.  Firstly, this  is 
required  by  the  Directive  and  secondly  all  the  Member  States  have  accepted  FATF 
Recommendation  No  8,  which  states  that  "governments  should  ensure  that  these 
[unregulated]  institutions  are  subject  to  the  same  anti-money  laundering  laws  or 
regulations  as  all  other  financial  institutions  and  that  these  laws  or  regulations  are 
implemented  effectively".  The  Commission  would  urge  Member  States  to  pay  careful 
attention  to  this  area.  The  Commission  itself  will  continue  to  monitor  the  situation 
closely, notably  via the annual  FATF Reports on money  laundering techniques (see point 
III.7 of this report) and through the work of the Contact Committee. 

4. The coverage of activities outside the financial  sector 

Article  12 of the Directive provides that "Member  States shall ensure that the provisions 
of  this  Directive  are  extended  in  whole  or  in  part  to  professions  and  to  categories  of 
undertakings,  other  than  the  credit  and  financial  institutions  referred  to  in  Article  1, 
which engage in activities which are particularly  likely to be used  for  money-laundering 
purposes". 

As  the  first  report  noted,  this  article  imposes  an  obligation  but  its  broad  wording  allows 
Member  States a large measure  of  discretion  in its  application. 

In  order  to  coordinate  as  far  as  possible  the  application  of  this  provision  Article  13(d) 
gives the Directive's  Contact  Committee  the role of examining  "whether  a profession  or a 
category  of  undertaking  should  be  included  in  the  scope  of  Article  12 where  it  has  been 
established  that  such  profession  or  category  of  undertaking  has  been  used  in  a  Member 
State for  money  laundering". 

The  Contact  Committee  has  been  engaged  in  this task  for  some  time  now  but  has  not  so 
far  been  able  to  reach  a  final  agreement  on  a  formal  Committee  Opinion  on  the 
application  of  Article  12. The  main  sticking  point  remains  the  obligations  to  be  imposed 
on certain  professions  and  in particular the  legal  professions. 

This  sensitivity  was  already  apparent  in  the  Council's  conclusions  on  the  Commission's 
first  report  when  it  encouraged  "  a  more  coordinated  application  of  the  Directive, 
particularly  with  respect  to 
the  professions  and  types  of  undertakings  which  are 
subject  to  the  Directive's  provisions  taking  into  account  the  special  status  of  legal 
professions 

In  point  4  of  its  resolution  Parliament  "calls  on  the  Commission,  taking  account  of  the 
preliminary  work  of  the  Contact  Committee,  to  submit  a  proposal  for  a  revision  of  the 
Directive  ....  to  include  within  the  direct  scope  of  the  Directive  those  occupations  and 
types  of  enterprise  which  can  definitely  be  considered  to  be  involved  or  likely  to  be 
involved  directly  or indirectly  in money  laundering". 

The  work  of  the  Contact  Committee  in  this  area  has  led  to  the  following  preliminary 
conclusions  : 

-  any  decision  to  include  a  profession  in  the  scope  of  any  individual  Member  State's 
legislation  should  keep  the  balance  between  the  burdens  to  be  imposed  and  the  real 
risk of money  laundering  ; 

- 

it  would  be  incompatible  with  the  spirit  of  the  Directive  if  professions  carrying  out 
activities  involving  in  fact  a  comparable  risk  of  money  laundering  were  not  made 
subject  to similar controls  ; 

-  Member  States  should  carefully  consider  whether  a  number  of  specified  professions 
involved  in  their  country  a  demonstrable  risk  of  money  laundering  and,  if  that  were 
the  case,  they  should  bring  the  professions  concerned  under  certain  aspects  of  the 
legislation  implementing the Directive where this was likely to prove effective  ; 

- 

the  professions  in  question  are  the  gambling  industry,  involving  casinos,  bookmakers 
and  lotteries; dealers  in  high-value  items, namely  real  estate  agents, jewellers,  dealers 
in  precious  metals  and  precious  stones,  art  and  antique  dealers,  auctioneers  and  coin 
and stamp dealers ; 

10 

- 

the  provisions  of  the  Directive  which  might  be  imposed  would  include  the 
identification  requirement,  when payment  over a specified  amount  was made by cash 
or bearer instrument,  a record-keeping  requirement  and a possible obligation  to report 
suspicious transactions;  at the same time for  any  such requirements to be  meaningful 
the necessary procedures to enforce them would have to be established ; 

-  as  regards  the  professions,  a  majority  of  delegations  have  been  able  to  agree  as  a 
general  principle  that  the  legal  professions  could  be  made  subject  to  the  money 
laundering  provisions  when  they  carry  out  some  kind  of  financial  intermediation  in 
financial  transactions  and  agreed  to  consider  carefully  the  need  to  apply  the  anti-
money  laundering  provisions  to  lawyers  and  notaries, taking  into account  their  status 
and the effective  scope of their activities ; 

-  however  a  number  of  delegations  felt  unable  to  make  any  distinction  between  the 
different  services  which  members  of  the  legal  professions  might  provide  to  their 
clients and pointed out that in their countries these (and other) professions'  obligation 
of  discretion  and  client  confidentiality  was  absolute;  certain  Member  States  also 
insisted  that  they  would  wish  to  fully  explore  the  possibilities  offered  by  self-
regulation  before  contemplating  making  these  professions  subject  to  the  anti-money 
laundering  legislation. 

This is how matters currently  stand as regards the discussion of this issue in the  Contact 
Committee. 

However  the  question  of  the  application  of  anti-money  laundering  rules  to  professions 
and  activities  outside  the  conventional  financial  sector  has  also  been  discussed  in  other 
fora.  The  conclusions  of  the  Dublin  European  Council  of  December  1996  contain  a 
commitment  to  the  "lull  application  of  the  Directive  on  money  laundering  and  its 
possible extension  to those relevant  professions  and  bodies outside  the classical  financial 
sector".  That  same  European  Council  established  the  High  Level  Group  on  Organised 
Crime  with  the  task  of  drawing  up  a  comprehensive  action  plan  containing  specific 
recommendations, including realistic timetables for carrying out the work. Its action plan 
was approved  at the Amsterdam  European  Council  in June  1997. Action  point  26, much 
of  which  is  concerned  with  anti-money  laundering  measures  (and  is  attached  to  this 
report  as Annex  5) states  in (e) that  "the  reporting  obligation  in Article  6 of the money 
persons  and  professions  other  than  the 
laundering  Directive  should  be extended  to 
financial  institutions mentioned in the Directive". The target date set to achieve this is the 
end of 1998. 

The  Contact  Committee  continued  its discussions  on  the  application  of the  Directive  to 
vulnerable non-financial  professions  at its meeting on  11 December  1997, with particular 
reference  to  the  Action  Plan.  The  Commission  noted  the  ambitious  and  far-reaching 
recommendations of the Action Plan in this area, which had been approved at the highest 
political level. 

The discussion  concentrated  on the professions  and in particular on the legal  professions. 
The Commission  explored  again with the Member  States whether  a distinction  could  be 
made between the activities  of the legal  professions  involving  legal  advice, defence  and 
litigation  and  other  less-privileged  commercial  activities  performed  by  these  same 
professions. 

11 

As regards the  professions  the Action  Plan on organised  crime  also contains  an action 
point which may be of relevance to the  prevention  of the misuse of the services of these 
professions  for  the  purpose  of  money  laundering.  Action  point  12  envisages  that 
"measures  to  shield  certain  vulnerable  professions  from  influences  of  organised  crime 
should  be  developed,  for  instance  through  the  adoption  of  codes  of  conduct.  A  study 
should  propose  specific  measures,  including  legislative  action,  to  prevent  notaries, 
lawyers, accountants  and  auditors  from  being exploited  or getting  involved  in  organised 
crime  and  ensure  that  their  professional  organisations  are  engaged  in  the  establishment 
and enforcement  of such codes of conduct at the European level". A possible joint action 
is envisaged for mid  1999. 

Annex  6  presents  the  current  situation  as  regards  the  coverage  of  non-financial 
professions  by the Member States' anti-money  laundering  legislation. It will be seen that 
much progress has been  made since the Commission's first report. In addition  a number 
of  Member  States  have  plans  to  further  extend  the  coverage  of  their  legislation. 
Nonetheless there are still considerable differences  in coverage from  one State to another. 

In  view  of  these  differences  and  the  shift,  noted  by  the  FATF,  of  laundering  activities 
from  the traditional financial sector  to non-financial  professions  or enterprises,  it would 
seem strange if the ambition reflected  in the Action Plan was not matched by that shown 
by the Commission within its area of competence. 

5. Identification  of customers in non-face to face transactions 

Article  3  of  the  Directive  requires  that  banks  and  financial  institutions  should  identify 
their  clients,  keep  appropriate  records  and  take  reasonable  measures  to  seek  to  identify 
beneficial owners. 

In  its  report  Parliament  expressed  concern  at  the  weakening  of  the  client  identification 
requirements, particularly  in the context of direct banking. 

The Contact  Committee has discussed  the problem  of non-face  to face  transactions  on a 
number  of occasions  and has agreed  a number  of principles  to be applied  to ensure that 
customers are adequately  identified. 

The  whole  area  of customer  identification  has  also  been  reviewed  by  the  FATF, which 
annexed to its  1996-97 annual report  an evaluation of measures taken by FATF members 
dealing with  identification.  Its conclusion  was that "on  the whole, identification  regimes 
in FATF members are deemed satisfactory".  It also noted that this question had to be kept 
under review  with  particular  reference  to the development  of electronic  transactions and 
financial  services through new technologies. 

The Commission would  agree with these conclusions. 

12 

6. Cooperation  between  authorities  concerned  with  money  laundering 

This  point,  which  is of crucial  importance  if the  EU and  international  fighl  against  money 
laundering  is to be successful,  was raised  both  by  the Council  and  by  Parliament. 

In  Article  6  of  the  Directive  reference  is  made  to  "the  authorities  responsible  for 
combating  money  laundering".  It  is not  specified  who  those  authorities  should  be  nor,  in 
contrast  with  other  directives  in  the  financial  sector,  is  any  specific  provision  made  for 
cross frontier  cooperation  between  those  authorities. 

The  Commission's  first  report  noted  that  the  Directive  made  no  attempt  to  harmonise  the 
relevant  law enforcement  aspects,  including  the  nature  and  organisation  of  the  authorities 
which  should  receive  the  suspicious  transaction  reports,  the  procedures  to  be  followed 
once  the  information  had  been  transmitted  and  the  sharing  of  information  with  other 
national  and  foreign  authorities. 

The  first  report  stated,  however,  that  appropriate  coordination  on  these  and  other  matters 
related  to  law enforcement  would  contribute  to reinforcing  the  efficiency  of the  reporting 
scheme  in particular  and  of the anti-money  laundering  system  as a whole. 

A  first  point  to  be  made  is  that  full  implementation  of  the  Strasbourg  Convention  of  the 
Council  of  Europe  by  all  the  Member  States  would  provide  an  improved  basis  for 
international  cooperation.  As  indicated  above  (see  point  II.3) there  seems  to be  a  genuine 
commitment  to achieve this objective  as rapidly  as possible. 

However,  even  this  may  not  be  enough.  Article  18  of  the  Strasbourg  Convention  still 
contains  numerous  grounds on which co-operation  may  be  refused. 

Various  efforts  are  already  under  way  to  improve  in  particular  the  exchange  of 
information  : 

6.1.  Exchange  of  information  and  co-operation  between  the  bodies  set  up  to  receive 
suspicious  transaction  reports 

Article  6  of  the  Directive  implies  that  Member  States  must  designate  an  authority  or 
authorities  to  receive  suspicious  transaction  reports. These  bodies  are  sometimes  referred 
to as Financial  Intelligence  Units or  FIUs. 

financial  services 

The  Directive  does  not  specify  what  form  those  bodies  should  take  and,  in  contrast  to 
legislation,  does  not  contain  provisions  on 
other  Community 
professional  secrecy  and  on  the  exchange  of  information.  Given  the  different  status  and 
role  of  the  FIUs  as  they  have  developed  in  the  Member  States  (see  below)  it  would  be 
extremely  difficult  now  fully  to coordinate  this aspect  of the anti-money  laundering  effort 
under the  first  pillar of EU  law. However,  given  the  importance  of this  issue the  Directive 
could  perhaps  set  out  some  provisions  for  relations  between  the  administrative  FIUs 
while encouraging  cooperation  with  and  between  those of a different  type. 

13 

In June  1995 the  US  Financial  Crimes  Enforcement  Network  (FINCEN)  and  the  Belgian 
Cellule  de  traitement  des  informations  financières  (CTIF)  organised  in  the  Egmont 
Palace  in  Brussels  the  first  international  meeting  of  FIUs.  This  Egmont  Group  has  now 
met  on  five  occasions,  has  become  a  genuine  international  forum  and,  though  having  no 
official  status,  has  become  an  essential  element  in  the  international  fight  against  money 
laundering. 

The general  objectives  of the Egmont  Group can be summarised  as follows4  : 

- 

to establish  the  list of all  FIUs 

- 

to organise  meetings to discuss operational  problems 

- 

- 

to  share  the  experience  of  the  Group  to  assist  countries  considering  or  preparing  the 
creation  of an FIU 

to  encourage  and  facilitate  international  cooperation  and  exchange  of  information 
between  the various  FIUs. 

Over  30  countries  have  participated  in  the  work  of  the  Egmont  Group  from  Europe,  the 
Americas,  Asia  and  Australasia.  A  number  of  international  organisations,  including  the 
Commission,  have  taken  part  as  observers.  The  Group  has  three  working  parties, 
covering  legal  obstacles, means of communication  and  training. 

The  legal  working  party  has  drawn  up  a  model  cooperation  agreement  or  memorandum 
of  understanding  (MOU).  Via  a  questionnaire  the  working  party  has  also  attempted  to 
draw  up  an  inventory  of  the  possibilities,  conditions  and  limitations  for  cooperation 
between  the relevant  FIUs of the participating  countries. 

The  main  obstacle  has  been  found  to  be  the  different  nature  of  the  FIUs  in  different 
countries.  The  three  main  categories  are  administrative/intermediary,  police  or  judicial 
authorities,  though  some  may  be  mixed  police/judicial  authorities  while  for  others  their 
precise  status may  not be  clear. 

The  breakdown  for  the  Member  States  is as  follows  (source:  Egmont  Group  international 
cooperation  survey) : 

- 

Intermediary  body  :  Belgium,  Finland  (FSA),  France,  Greece,  Italy,  Netherlands, 
Spain 

-  Police  authority 

:  Austria,  Finland  (MLID),  Germany,  Ireland,  Sweden,  United 

Kingdom 

-  Judicial  authority  : Luxembourg,  Portugal 

Mixed  police/judicial  authority  : Denmark 

4 

Information  based on the  1995-96 annual report of the CTIF. 

14 

Problems  of  cooperation  and  exchange  of  information  can  and  do  arise  because  of  the 
different  legal  nature  of the  FIUs.  This  is not  always  an  insurmountable  obstacle  as  some 
bilateral  cooperation  agreements  do  exist  even  where  the  nature  of  the  FIUs  is  different 
(e.g.  between  an  administrative  and  a  police  service).  However,  certain  Member  States 
are currently  prevented  from  concluding  such  agreements  because  their  law provides  that 
police  services can only  cooperate  with  other  police  services using  existing  channels. 

In  any  case  bilateral  agreements  are  not  the  ideal  solution  and  a  multilateral  approach, 
perhaps  based  on  an  EU or  international  convention,  would  be preferable.  It is clear  that  a 
solution  to  this  problem  of  the  flow  of  information  between  FIUs  would  greatly  enhance 
the  international  effort  to combat  money  laundering. 

Annex  7  sets  out,  as  regards  the  EU  Member  States,  the  current  conclusions  of  the 
Egmont  legal  working  group  as  regards  the  general  possibility  of  bilateral  agreements 
and the direct  exchange  of  information. 

Another  problem  affecting  the flow  of information  lies in the  special  nature  and  treatment 
in  many  Member  States  of  the  information  resulting  from  the  suspicious  transaction 
reports made  by  financial  institutions to the  FIUs.  It is often  the case that this  information 
is  treated  as  especially  confidential  (no  doubt  to  win  the  confidence  of  the  financial 
sector)  and  it  is  laid  down  that  this  information  should  not  be  automatically  circulated  in 
the  traditional  police/judicial  circuits.  The  FIUs  will  often  filter  this  information  and 
carry  out  an  initial  analysis  before  it  is  passed  on  to  these  circuits.  This  filter  might  itself 
be a police  service  but one that  is set  apart. 

6.2.  Exchange  of  money  laundering  information  once  it  is  available  to  police  and 
judicial  authorities 

It  is  necessary  to  bear  this  filter  function  in  mind  in  the  context  of  the  feasibility  study 
currently  being  undertaken  in  the  context  of  the  third  pillar  concerning  an  EU-wide 
computerised  data exchange  system  for  money  laundering  related  transaction  information 
for  investigation  purposes.  This  project  has  been  discussed  in  various  third  pillar  bodies 
and  in  particular  in  the  Drugs  and  Organised  Crime  Working  Party.  The  information  in 
question  would  already  have  passed  through  the  filter  stage  and  would  be  information 
available  to  and  used  by  law  enforcement  authorities.  Action  point  26(a)  of  the  Action 
plan  on  organised  crime  confirms  the  commitment  to  this  exercise  (see  Annex  5).  This 
system,  which  would  take  account  of  the  possibilities  offered  by  EDU/Europol,  would 
provide  a  valuable  additional  tool  to  the  police  efforts  against  money  laundering.  It  is 
unlikely,  however,  that  it  would  do  away  with  the  need  for  enhanced  cooperation  and 
exchange  of  information  between  the  FIUs  themselves. 

15 

A  legal  basis  for  exchange  of  information  is opened  up  by  the  second  additional  Protocol 
to  the  Convention  on  the  penal  protection  of  the  European  Communities'  financial 
interests5.  Article  7 of  the  Protocol  provides  for  cooperation  between  the  Member  States 
and  the  Commission  in  the  fight  against  the  laundering  of  the  proceeds  of  fraud  and 
corruption  against  the  Communities'  financial  interests.  To  this  end,  the  competent 
authorities  in  the  Member  States  may  exchange  information  with  the  Commission  so  as 
to  make  it  easier  to  establish  the  facts  and  to  ensure  effective  action  against  money 
laundering. 

7. Techniques  of money  laundering  (typologies) 

In point  3 of  its Resolution,  Parliament  called  on  the Commission  to "report  on  new  types 
of  money  laundering  arising  from  changes  in  business  practices  and  money  transfers,  and 
to submit  appropriate  proposals  for combating  it". 

The  European  Commission  is  not  itself  a  direct  source  of  expertise  on  the  different 
techniques  used  by  money  launderers  and  on  the  trends  in the  practices  used  by  criminal 
elements. It does, however  monitor  closely  the work  and reports of other  bodies. 

The  1997  World  Drugs  Report  produced  by  the  UNDCP6  contains  an  interesting  chapter 
on money  laundering  and  describes various techniques that are currently  used. 

The most  useful  regular publication  on money  laundering  techniques  is the annual  Report 
on money  laundering  typologies  produced  by the FATF. These  reports  are annexed  to  the 
FATF  Annual  Reports  and  are  publicly  available  via 
the  FATF  website  at 
http://www.oecd.org/fatf/ 

institutions.  This  is  believed  to  reflect 

One  of  the  concluding  paragraphs  of  the  1996-97  FATF  report  states  that  "as  regards 
money  laundering  techniques,  the  most  noticeable  trend  is  the  continuing  increase  in  the 
use  by  money  launderers  of  non-bank  financial  institutions  and  non-financial  businesses 
level  of 
relative  to  banking 
compliance  by  banks  with  anti-money  laundering  measures.  Traditional  methods  remain 
most  popular,  as  is  demonstrated  by  the  increase  in  cash  smuggling  across  national 
borders,  and  the  smurfing  of  cash  deposits  followed  by  telegraphic  transfers  to  other 
jurisdictions.  In  the  non-bank  financial  sector,  the  use  of  bureaux  de  change  or  money 
remittance  businesses  to dispose  of criminal  proceeds  remains the  most  often  cited  threat. 
Money  launderers  continue  to  receive  the  assistance  of  professional  facilitators,  who 
assist  in  a  range  of  ways  to  mask  the  origin  and  ownership  of  tainted  funds.  The  use  of 
shell  companies,  usually  incorporated  in  offshore  jurisdictions,  is  the  most  common 
technique, with  the use of accounts  held  by relatives or friends  also being  popular". 

the  increased 

5  OJ NoC22!,  19.7.1997, p. 12. 

6  Oxford  University  Press  1997 - ISBN 0-19-829299-6 

16 

An  annex  to  the  same  FATF  typologies  report  is  concerned  with  issues  concerning  new 
payment  technologies.  FATF  has  taken  the  lead  in  providing  a  forum  in  which  to 
coordinate  and  facilitate  communication  between  the  e-money  industry  and  the  law 
enforcement/regulatory  communities  and  interested  international  organisations. 

The  main  concerns  relate  to the possibility  of greater  ease of transferability  of  large  sums 
of money,  possibly  permitting  anonymous  operation  or providing  no audit  trail. 

The  general  feeling  among  money  laundering  experts  seems  to  be  that  this  is  a  problem 
for the near  future  rather than  a problem  of the  moment. 

FATF  states  that  "electronic  money  (e-money)  has  the  potential  to  make  it  easier  for 
criminals  to hide the source  of their  proceeds and  move  those  proceeds  without  detection. 
And  it  is  safe  to  assume  that  if  these  new  systems  develop  in  such  ways  as  to  somehow 
better suit  the criminals'  needs than existing payment  systems, they  will  use  them". 

The  Action  Plan  on  organised  crime  provides  in  action  point  5  for  a cross-frontier  study 
on  high-technology  crime  and  states  that  "attention  should  be  paid  both  to  illegal 
practices  (such  as  the  use  of  these  technologies  by  criminal  organisations  to  facilitate 
their activities)  or illegal  contents". 

The  Commission  will  continue  to  monitor  developments  in  the  area  of  new  technologies 
very  closely. 

8.  Money  laundering  and  the changeover  to the  Euro 

The  physical  changeover  as  from  1 January  2002  will  be  an  enormous  operation.  The 
shorter  the  period  the greater  will  be the  pressure  on the  financial  system. 

It  is  anticipated  that  a  vast  amount  of  dormant  cash  will  emerge  held  by  people  who  do 
not  have  bank  accounts.  By  definition  these  people  will  not  be  known  to  the  banks  when 
they  seek  to  change  their  money.  There  is  a  fear  that  criminal  money  will  also  emerge 
either  to  be  fed  into  existing  bank  accounts  or  to  be  pre-laundered  (exchange  of  used 
small  denomination  notes for  new,  larger denomination  notes). 

The  Commission  has  said  from  the  outset  that  money  laundering  defences  must  not  be 
relaxed  in the  context  of the  changeover  to the  single  currency.  This  will  clearly  apply  to 
the  opening  of  new  accounts  and  to  transactions  above  the  ECU  15  000  threshold. 
However,  it will  be  more  difficult  for  banks  to  identify  suspicious  transactions  below  that 
threshold,  given  the  pressure  they  will  be  under  and  the  appearance  at  their  counters  of 
large  numbers of  unknown  customers. 

It  has  been  agreed  at  the  Money  Laundering  Contact  Committee  that  the  Committee  will 
have  to examine  this question  in depth  to examine  whether  any  additional  safeguards  will 
be  needed  and  would  be  feasible.  Discussions  will  also  need  to  be  held  with  the  banking 
sector. 

17 

9. The  macroeeonomic effects  of  money  laundering 

In  point  15  of  its  Resolution  Parliament  requests  the  Commission  to  report  on  the 
possible monetary  and  other macroeeonomic effects  of money  laundering. 

The  Commission  has  not  itself  carried  out  any  research  in  this  area,  nor  does  it  have  the 
resources  to  do  so.  Indeed  the  only  body  which  has  carried  out  work  in  this  interesting 
but extremely  complex  area appears to be the  International  Monetary  Fund  (IMF). 

The  FATF  itself,  in its albeit  limited  examination  of this topic, has also relied  on  the  IMF 
to launch  the discussion.  The IMF  presented  a staff  statement  on  this  subject  at  the  FATF 
Plenary  in June  1996. Two IMF working  papers have also been  issued7. 

The  following  paragraphs  quote  extensively  from  a review  of these  two  papers  published 
in the  29 July  1996 edition of the IMF  Survey. 

that  although  difficult  to  measure,  the  magnitude  of  the  sums  involved 
It  is  concluded 
and  the extent  of the criminal  activities  that  generate  [criminal]  income  have  implications 
for  both  the  domestic  and  the  international  allocation  of  resources  and  macroeeonomic 
stability. 

there 

the  IMF  reports, 

Although, 
the 
macroeeonomic  effects  of  money  laundering,  indirect  macro-based  empirical  research 
and  related  studies  of  crime  and  the  underground  economy,  coupled  with  the  pervasive 
role  of  money  laundering  in  illegal  activity,  suggest  that  money  laundering  may  be 
sufficiently  widespread  to exert  an  independent  impact  on  the  macroeconomy. 

is  currently  no 

literature  on 

theoretical 

The  common  theme  of  the  available  research  is  that  if  crime,  underground  activity,  and 
the  associated  money  laundering  occur  on  a  sufficiently  large  scale,  policy  makers  must 
take them  into  account. 

Money  launderers  generally  do  not  look  for  the  highest  rate of  return  on  the  money  they 
launder,  but  for  the  place  or  investment  that  most  easily  allows  the  recycling  of  their 
money  - even  if this requires accepting  a lower rate of return.  These movements  may  well 
be  in  directions  opposite  to  those  that  would  be  expected  on  the  basis  of  economic 
fundamentals.  Money  may  therefore  move  from  countries  with  good  economic  policies 
and  activities  with  higher  rates  of  return  to  countries  with  poorer  policies  and  activities 
with  lower  rates  of  return.  Thus,  because  of  money  laundering  the  world's  capital  tends 
to  be  invested  less  optimally  than  in  the  absence  of  such  activities.  As  a  consequence  of 
such  counterintuitive  capital  movements,  policymakers  may  be  confused  about  the 
policies  to  be  pursued  and  may  respond  inappropriately.  For  example,  a  shift  in  apparent 
money  demand  - owing  to  money  laundering  that  is nowhere  rellected  in  the  data  - could 
have consequences  for  interest  and  exchange  rate  volatility. 

7 

"Money  laundering  and  the  international  financial  system" "  by  Vito Tanzi, working  paper  No  96/55 
and "Macroeeonomic  implications of money  laundering" by Peter J. Quirk, working paper No 96/66. 

18 

At  the  national  level,  therefore,  large  financial  flows  related  to  money  laundering  could 
influence  variables  such  as  exchange  rates  and  interest  rates.  On  the  international  level, 
capital  movements  originating  from  laundering  activities  - especially  when  they  are  seen 
as temporary  - could  have  destabilising  effects  because  of  the  integrated  nature  of  global 
financial  markets.  Financial  difficulties  originating  in  one  centre  can  easily  spread  to 
others, thus transforming  a national  problem  into a systemic  one. 

The  two  working  papers  both  emphasise  that  the  development  of  efficient  and  stable 
capital  markets  requires  that  participants  have  full  confidence  in them.  If markets  were  to 
be  contaminated  by  money  controlled  by  criminal  elements,  they  would  react  more 
dramatically  to rumours  and  false  statistics, thus generating  more  instability. 

The  transparency  and  soundness  of  financial  markets  are  key  elements  in  the  effective 
functioning  of  economies,  and  money  laundering  can  threaten  both.  Criminally  obtained 
money  can  corrupt  financial  market  officials,  and  the  damage  can  be  long  lasting, 
because  the credibility  of markets, though  quickly  lost, takes a long time to be  rebuilt. 

In  its  presentation  to  the  FATF  Plenary  the  IMF  summarised  the  potential  macroecomic 
consequences  of money  laundering  as follows  : 

•  changes  in  the  demand  for  money  that  seem  unrelated  to  measured  changes  in 

fundamentals 

•  volatility  in  exchange  rates  and  interest  rates  due  to  unanticipated  cross-border 

transfers  of  funds 

• 

increased  instability  of  liabilities  and  heightened  risks  for  asset  quality  for  financial 
institutions,  creating  systemic  risks  for  the  stability  of  the  financial  sector  and  for 
monetary  developments  generally 

•  adverse  effects  on  tax  collection  and  the  allocation  of  public  expenditures  due  to 

misreporting  of income  and  wealth 

-•  contamination  effects  on  legal  transactions  as  transactors  become  concerned  about 

possible  criminal  involvement,  and 

•  other  country-specific  distributional  effects  or asset  price  bubbles  due  to disposition  of 

"black  money". 

The  IMF  concluded  that  it  intended  to  examine  closely  the  implications  of  money 
in  respect  o\'  those  countries  where  an  analysis  of  money 
laundering,  particularly 
laundering 
the 
macroeconomy  (for  example,  in countries  where  drugs  or  other  illegal  exports  are  known 
to be important  or where weaknesses  in the  fiscal  regime encourages  money  laundering). 

the  behaviour  of 

for  understanding 

is  particularly 

important 

19 

The IMF is clearly particularly  concerned  about the situation  in the countries with which 
it  is  especially  involved.  It  is  recognised  that  some  countries  will  be  much  more 
vulnerable  than  others.  When  this point  of  Parliament's  resolution  was  discussed  in the 
Money  Laundering  Contact  Committee  (November  1996) one delegation  stated  that  any 
macroeconomic  effect  of  money  laundering  was  probably  only  marginal  in  a  major 
industrialised  country. 

Although  this view was not contradicted  the Committee  felt  that  the Commission  should 
as  a  minimum  try  to  monitor  the  work  being  carried  on  in  this  technical  and  specialist 
area in other fora. This the Commission will endeavour to do. 

10. The results of the anti-money laundering  effort 

In its discussions  of the Commission's first report  Parliament  attached  great  importance 
to the collection  of  information  on the results of the  considerable  efforts  being  made  to 
combat  money  laundering.  Indeed  point  1  of  Parliament's  resolution  links  the  full 
transposition  of  the  Directive  with  the  presentation  of  a  detailed  report  indicating  the 
number  of  suspicious  transactions  reported,  the  number  of  money  laundering  cases and 
convictions and the amounts of money  confiscated. 

Before  reporting  on  its  efforts  to  obtain  the  information  sought  by  Parliament,  the 
Commission  would  wish  to  stress  once  again  the  preventive  objective  of  the  directive. 
This  is  reflected  in  its  title  which  refers  to  the  "prevention  of  the  use  of  the financial 
system for the purpose of money laundering". 

Ideally  potential  money  launderers  should  find  the  financial  system  well  defended  and 
should  be  discouraged  from  attempting  to  use  it.  There  is  some  evidence  that  this  is 
happening.  Increases  in  cross-frontier  movements  of  cash,  the  search  for  laundering 
possibilities  outside  the  traditional  financial  sector  and  reported  increases  in  the  actual 
cost  of  money  laundering  point  to  some  success  in  making  money  laundering  more 
difficult  and expensive for organised crime. 

The  Commission  and  the  Member  States  therefore  believe  that  it  would  be  wrong  to 
judge the results of the Directive  in particular and of the anti-money  laundering  effort  in 
general solely on the basis of certain relatively crude statistical  indicators. 

At the same time,  the system of the Directive is based on the monitoring by the  financial 
sector of unusual  or suspicious behaviour and the obligatory  reporting of such  behaviour 
to  the  authorities.  The  response  in  terms  of  numbers  of  reports  made  does  provide  an 
indication  of  the  effort  made  and  of  the  effectiveness  of  the  systems  put  in  place.  The 
financial  sector,  and  the  banking  sector  in particular,  has  made  considerable  efforts  and 
undertaken considerable expenditure to make the system effective.  They have themselves 
been calling for  feedback  to show that their efforts  are worthwhile and to enable them to 
further  develop their response. 

20 

Annex  8 shows  the  number  of  suspicious  transactions  reported  to  the  authorities  in  the 
Member  States. Although  it should  be borne  in mind  that  the range  of persons  under an 
obligation  to report  suspicions  and  the range of suspected  criminal  behaviour  (predicate 
offences)  which  should  give rise to reports differ  from  one Member  State to another the 
data reported show that the suspicious transaction reporting system appears to be working 
fairly well. 

On the other hand, much less data is currently  available on the prosecutions,  convictions 
and  seizures  of  money  resulting,  in  whole  or  in  part,  from  the  suspicious  transactions 
reports. 

A  number  of  Member  States  do  not  have  a  separate  money  laundering  offence  and 
prosecute  under  the  heading  of  "receiving".  This  probably  precludes  the  collection  of 
separate data on money laundering cases. 

In other cases the financial intelligence  unit (FIU) serves as a filter and will only  pass on 
a proportion of the cases it examines to the judicial or police authorities, at which point it 
may lose touch with the particular case. It would appear that there  is not always detailed 
feedback  from  those authorities to the FIU which would enable it to maintain  a record of 
the number of reports leading to prosecution and conviction. 

The  lengthy  nature  of  many  investigations  and  prosecutions  also  makes  it  difficult  to 
provide  results  data,  especially  when  the  anti-money  laundering  systems  have  only 
recently  been  put  in  play  or  are  still  evolving.  Furthermore  several  Member  States 
provided data in a form which was not readily comparable with that obtained from others. 
The relatively  simple form  of questionnaire  sent by the Commission was clearly  difficult 
for certain Member States to complete and the data received  did not always lend itself to 
summarisation in tabular form. 

Annex  9  attempts  to  provide  some  indication  of  results  of  the  suspicious  transaction 
reporting  system  and  of  the  number  of  prosecutions  and/or  convictions  for  money 
laundering  in  number  of  Member  States.  It  is clear  that  a  considerable  effort  would  be 
necessary  in  a  number  of  Member  States  in  order  to  provide  more  useful  figures.  In 
certain  Member  States  data  on  money  laundering  prosecutions  and  convictions  simply 
does not exist at present 

Similarly,  little data  is available  so far  on  amounts  of  money  seized  and/or  confiscated. 
Once  again  the  exercise  of  data  collection  is  inherently  difficult.  Cases  are  long  and 
complex  and  amounts  may  remain  frozen  for  long  periods  before  being  definitively 
seized or ultimately returned.  It does not appear that large amounts are being  confiscated 
and there are indications, from  certain  Member States, that much of the money  seized or 
frozen  ultimately has to be returned or released. 

21 

Examples  of  the  information  supplied  to  the  Commission  are  as  follows  :  Since  the 
creation  of the Belgian  FIU in December  1993, an amount of BF 3  116 million has been 
confiscated  in cases following  disclosures made to the FIU. Denmark reported that some 
DKK  50 million  had  been  confiscated,  DKK  18 million  had  been  paid  back  or  paid  in 
damages and  DKK  12 million  had been  imposed as supplementary fines. Ireland  reports 
the seizure of £IRL  15 500.  In Italy, the figures  for  1996 showed the following  amounts 
being  seized  (not  confiscated):  Lit  3 002  million  under  Article  648  bis  of  the  Criminal 
Code  (money  laundering)  and  Lit  68  631  million  under  Article  648  ter  (use  of  money, 
goods  or assets  or  unlawful  origin). The  UK confiscated  nearly  £  10.5  million  in  1996. 
Luxembourg  has  seized  over  LUF  300  million  in  connection  with  the  cases  it  is 
prosecuting  and  has  also  given  effect  to  a  confiscation  order  for  some  DEM  200  000 
issued  by the  German  courts. The conviction  in  Portugal  resulted  in  the  confiscation  of 
ESC 2.5  million, while  investigations  are  in hand  concerning  almost  ESC  1 800 million 
in  cash  and  property.  Sweden  reports  that  a  total  of  KR  124  million  was  seized  or 
otherwise secured in 1996-97. 

The  Commission  does  not  pretend  that  the  amount  of  data  it  is  able  to  supply  to  the 
Council  and  Parliament  at  this  stage  is  satisfactory.  The  Commission  will  continue  to 
work with the Member  States  in the Contact  Committee  to  improve the  situation, but  is 
fully  aware that this will  not be easy. The  involvement  of judicial  and  police  authorities 
under the third  pillar and of EDU/Europol will without doubt also  be necessary. 

There may also be the potential  for a contribution, at least  in the medium  or longer term, 
from the European  Monitoring Centre on Drugs and Drug Addiction. Council  Regulation 
(EC)  302/93  in  paragraph  5  of  its  Annex  A  includes  the  collection  of  information  on 
money laundering within the Centre's fifth priority area of work. 

22 

IV. CONCLUSIONS 

This second  Commission  report to the Council  and Parliament  on the implementation  of 
the  1991 anti-money  laundering  Directive confirms  that this legislation  has been  applied 
conscientiously  in all the Member States. 

The  Member  States  of  the  European  Union  thus  continue  to  demonstrate  their 
commitment  to  fighting  against  money  laundering  and  to  set  a  good  example  to  our 
neighbours in Europe and to countries further  afield. 

The global  nature of the problem  and  the need  for a global  response  are  reflected  in  the 
Member  States'  and  Commission's  continued  support  for  the  Financial  Action  Task 
Force, and in the anti-money  laundering technical  assistance being provided  via PHARE, 
in the Caribbean and in other regions. 

This  reflects  the  realisation  that  the  European  Union's  money  laundering  defences, 
however tight they may be, can easily be compromised by weaknesses elsewhere. 

Member  States'  legislation  is  not,  however,  limited  to  the  implementation  of  the 
Directive. Even apart from  the purely third pillar aspects, the Member States' readiness to 
further  develop this legislation beyond what is required by the Directive is proof that they 
fully  realise  the  long-term  and  evolving  nature  of  the  threat  that  is  posed  by  money 
laundering and of the effort  that is required to combat it. 

This  evolution  means  that  the  1991  money  laundering  Directive  risks  appearing 
somewhat out-of-date  in certain respects and this naturally  poses the question of whether 
it should be updated. 

The  first  issue  that  needs  to  be  considered  in  this  context  is  that  of  the  prohibition  of 
money  laundering.  Is  it  necessary,  to  quote  the  updated  FATF  recommendation,  "to 
extend  the  offence  of  drug  money  laundering  to  one  based  on  serious  offences"  ?  As 
Annex  4 shows, all the  Member  States have already  made considerable  progress  in this 
direction. 

At the same time, if the Directive were to be amended to cover other predicate  offences, 
this  would  again  raise  the  issue  of  prohibition  as  opposed 
to  criminalisation. 
Criminalisation  via the Directive continues to be rejected  by a number of Member States, 
which  would  appear  to leave a wider  prohibition  as the best option.  Furthermore, given 
the  obvious  difficulty  of  reaching  an  agreed  definition  of  what  constitutes  "serious 
crime",  it  is  most  probable  that  even  an  amended  Directive  would  leave  scope  for 
differences  in coverage  between  one  Member  State  and  another  and  would  not  achieve 
full  harmonisation  in this area. 

Nevertheless,  the  Commission  believes  that  the  need  to  keep  this  important  instrument 
up-to-date  argues  strongly  in  favour  of  a  widening  of  the  range  of  predicate  offences 
covered. 

23 

As  regards  the  activities  falling  within  the  scope  of  the  Directive  it  is  clear  that  the 
coverage of the financial  sector is fairly  comprehensive. 

On the other hand many activities and professions  outside the financial sector are already 
or are potentially  vulnerable  to money  laundering. The situation  is in constant  evolution 
as launderers seek new openings. 

Article  12 of the  1991 Directive  shows that  Member  States  were  already  then  aware  of 
the  dangers.  They  committed  themselves  to  apply  provisions  of  the  Directive  as 
appropriate  to  activities  outside  the  financial  sector  when  there  was  a  real  danger  of 
money laundering. 

Annex 6 shows that Member  States have indeed been ready to put this commitment  into 
effect  in  an  increasing  number  of  cases,  and  as  their  experience  of  combating  money 
laundering develops. 

In adopting  the Action  Plan  on organised  crime in June  1997, following  its approval  by 
the  Justice  and  Home  Affairs  Council,  the  Heads  of  State  or  Government  of  the  EU 
Member States have now given their backing to a general extension by the end of  1998 of 
the  suspicious  transaction  reporting  requirement  to  persons  and  professions  outside  the 
financial  sector.  Although  this  is  not  spelt  out,  it  is  the  Commission's  view  that  an 
obligation 
transactions  presupposes  corresponding  customer 
to  report  suspicious 
identification  and record-keeping requirements. 

This  being  the  case,  the  Commission  must  be  prepared  to  assume  its  responsibilities 
under its first pillar competence. Accordingly the Commission  has concluded  that a new 
directive  is needed  and  its  services have  begun  work  on a new proposal  for  a directive, 
the main provision  of which will be a major  extension outside the financial  sector of the 
obligation to report suspicions of money laundering. 

The Council's  conclusions  on the Commission's first report  laid  particular  emphasis on 
cooperation  between  anti-money  laundering  authorities.  The  Commission  supports  and 
has agreed to finance, under the Oisin programme, the feasibility  study for an  information 
exchange  system  relating  to  money  laundering  information  held  by  the  EU  police 
authorities. As regards the exchange of money  laundering  information  between financial 
intelligence  units (FHJs) the Commission  is concerned  by the difficulties  (as reflected  in 
Annex  7) which  still  appear  to prevent  the communication  and  exchange  of  information 
between certain units having a different  legal status. 

As regards the protection  of the European Communities' financial interests, an exchange 
the  police  and  judicial  prosecution  authorities  and  the 
of  information  between 
Commission  is already  provided  for.  However, a structured  cooperation  and exchange of 
information  between  the FIUs themselves and  between  them  and the Commission  at the 
level  of  administrative  mutual  assistance  is  also  needed.  For  this  purpose  a  clearly 
defined  legal framework  should be established at Community level. 

24 

The  Commission  commends  the  excellent  work,  at  an  increasingly  international  level, 
carried  out  by  the  Egmont  Group.  It  invites  the  Member  States  to  consider  whether  it 
might  be  worthwhile  to  bring  together  the  FIUs of the  Member  States  to  discuss  ways  of 
promoting  improved  cooperation  within  the European  Union  context. 

At  the  same  time  the  Commission  services  are  urgently  considering  whether  the  proposal 
to  update  and  extend  the  1991  Directive  could  usefully  address  any  of  the  issues  relating 
to relations  between  FIUs. 

Finally,  as  regards  the  results  of  the  money  laundering  effort,  the  Commission  will 
continue  to  seek  to  be  able  to  provide  more  detailed  and  more  comprehensive  statistics. 
The  Commission  notes  the  interest  of  Europol  in this  area  and  believes  that  Europol  will 
be  able  to  play  an  important  role  in  the  collection  of  data  on  prosecutions,  convictions 
and  asset  confiscations.  The  Commission  proposes  henceforward  to  include  results  data 
in every  implementation  report  it presents  to the Council  and  Parliament. 

Despite  the  relative  lack  of  statistics  it  can  be  concluded  that  while  the  financial  sector's 
response  has generally  been  good  in terms of the  number  of suspicious  transaction  reports 
made  to  the  competent  authorities  it  does  not  seem  that  this  effort  is  at  present  being 
translated  into  large  numbers  of  prosecutions,  convictions  or  asset  confiscations.  The 
Commission  would  stress  once  again  that  the  directive  has  an  important  preventive  role 
and  believes  that  the  directive  has  been  successful  in making  access  to the  EU's  financial 
system  more  difficult  for  criminal  money.  At  the  same  time  it  is  clear  that  money 
laundering  is  going  on  and  that  suspicious  transaction  reports  must  be  pinpointing  a 
proportion  of  that  criminal  money.  That  being  the  case  it  has  to  be  noted  that  the  results 
beyond  the directive  in the  police  and judicial  spheres  appear  to  be  limited,  even  if on  the 
increase.  While  it  is  not  within  the  remit  of  this  report  to  analyse  the  reasons  for  this 
situation,  it is clearly  crucial  that the commitment  of the  financial  sector,  and  increasingly 
of the  other  sectors  called  on  to  participate  in the  fight  against  money  laundering,  should 
be justified  in  terms  of  a  successful  criminal  law  response.  There  is  no  doubt  that  this  is 
an area in which  much  further  work  is  needed. 

25 

ANNEX  1 

COUNCIL  CONCLUSIONS 

The  Council  has  examined  the  first  Commission  report  on  the  implementation  of  the 
Directive concerning the fight against money laundering. 

The Council noted with great interest the analysis set out by the Commission in its report 
as  well  as  the  conclusions  which  were  drawn.  The  Council  largely  agrees  with  those 
conclusions. 

As the Commission points out, the application of the Directive has had a clear impact on 
the  setting-up  by  the  Member  States  of  systems  for  countering  money  laundering.  The 
progress already achieved  is very encouraging but there is a need for  continued  efforts  at 
national, as well  as at  European and  international  levels, to increase the effectiveness  of 
systems for countering money laundering. 

The  Council  invites  Member  States  to  take  the  necessary  steps  to  ensure  full  and 
complete application of the Directive. 

It notes with  satisfaction  that  the possibility  is being explored  of  bringing  about  a more 
coordinated application of the Directive, particularly with respect to the activities brought 
within its scope and to the professions  and types of undertakings which are subject to the 
Directive's provisions, taking into account the special status of legal professions. 

The Council would like the Commission to continue to reflect  on these questions in close 
collaboration  with  the  Member  States'  representatives,  meeting  in  the  context  of  the 
Contact Committee set up by the Directive. 

The  Council  agrees  entirely  with  the  Commission's  view  that  the  strengthening  of 
systems  for  countering  money  laundering  depends  on  closer  cooperation  between  the 
different  authorities  involved  in  fighting  this  phenomenon.  The  Council  would  like  the 
Commission  also to continue  to reflect  in depth  on  this question,  in  accordance  with  its 
powers. More generally,  requests all  the  relevant  bodies to step  up their discussions and 
to increase their cooperation in this area whenever necessary. 

The Council  invites the Commission to pursue the study of these different  questions and 
to submit  to  it any appropriate  proposals, taking  account  of experience  gained  since the 
adoption  of  the  Directive,  of  its  implementation  in  each  of  the  Member  States,  and  of 
work carried  out on these same questions by other international  bodies. In any event, the 
Council  invites the Commission  to report to it within eighteen  months on its thinking on 
these questions. 

26 

Parliament's  Resolution  on the  first  Commission  report to the European  Parliament 
and  the  Council  on  implementation  of Directive  91/308/EEC on  money  laundering 
(COM(95)54 -  C4-0137/95) 
(Official  Journal  No. C  198,  8-7-1996,  p. 245) 

ANNEX  2 

The  European  Parliament, 

having  regard  to  Council  Directive  91/308/EEC  of  10 June  1991  on  the  prevention  of  the 
use of the  financial  system  for  the purpose  of money  laundering  (OJ  L  166, 28-6-1991,  p. 
77.), 

having  regard  to  the  first  Commission  report  on  the  implementation  of  the  Money 
Laundering  Directive  to  be  submitted  to  the  European  Parliament  and  to  the  Council 
(COM(95)54-C4-0137/95) 

having  regard  to  the  Council  of  Europe  Convention  on  laundering,  tracing,  seizure  and 
confiscation  of proceeds  of crime concluded  in  Strasbourg  in  1990, 

having  regard  to  the  UN  Convention  against  Illicit  Traffic 
Psychotropic  Substances  concluded  in Vienna  in  1988, 

in  Narcotic  Drugs  and 

having  regard  to  the  recommendations  on  money  laundering  adopted  by  the  Council  of 
Ministers  of Justice  and  Home  Affairs  at  its meeting  in Copenhagen  on  1-2  June  1993, 

having  regard  to  the  opinion  of  experts  in  the  fields  of  banking  supervision  and 
prosecution  who  reported  at  the  meeting  of  20  December  1995  of  the  Committee  on 
Legal  Affairs  and  Citizens'  Rights  and  the  Committee  on  Civil  Liberties  and  Internal 
Affairs  on the problems  of implementing  and  transposing  the Directive  in practice, 

having  regard  to the  Council  Act  drawing  up  the  Convention  based  on  Article  K.3  of  the 
Treaty  on  European  Union  on  the  establishment  of  a  European  Police  Office  (Europol 
Convention)  (OJ  C 316, 27-11-1995, p.  1.), 

having  regard  its resolution  of  14 March  1996 on  Europol  (OJ  C 96,  1-4-1996, p. 288.), 

having  regard  to  the  report  of  the  Committee  on  Legal  Affairs  and  Citizens'  Rights  and 
the  opinions  of  the  Committee  on  Civil  Liberties  and  Internal  Affairs,  the  Committee  on 
Budgetary  Control  and  the  Committee  on  Economic  and  Monetary  Affairs  and  Industrial 
Policy  (A4-0187/96), 

A. whereas  financial  transactions  connected  with criminal  activities  are  continuing, 

B.  whereas  the  European  Union's  system  for  combating  money  laundering  is  inadequate 
and  in particular  does not sufficiently  cater  for  new forms  of financial  transaction, 

27 

C.  whereas  both  within  states  and  at  European  level  new  legislative  measures  are 
required to ensure comprehensive supervision of all natural and legal persons involved in 
the commercial conduct of financial transactions, 

D.  whereas  the  1990  Strasbourg  Convention  already  contains  provisions  on  legal 
assistance  which  would  make  it  possible  to  combat  the  economic  use  of  proceeds  of 
crime efficiently  at European level, 

E.  whereas,  although  Title  VI  of  the  Treaty  on  European  Union  contains  adequate 
provisions  on cooperation  in the fields of justice  and home  affairs,  there  is  no  sign  of 
comprehensive  legislative  activities  being  carried  out  to  improve  coordination  of  the 
work of judicial and police authorities at European level, 

F. in the belief that the rapid establishment  of a European Police  Office  pursuant to the 
Europol  Convention  could  make a major contribution  to  effective  measures  to combat 
money laundering and the crimes giving rise to it. 

G.  whereas,  in  its  recommendations  of  1993,  the  Council  of  Ministers  of  Justice and 
Home Affairs described  both the ratification  and implementation of the  1990 Strasbourg 
Convention  and  the  involvement  of  Europol  as  important  steps  to  combat  money 
laundering, 

1.  Calls  on  the  Commission  to  ensure  full  transposition  of  the  Directive  and  submit 
within the next two years a detailed report indicating the number of transactions reported, 
the number of proven cases of money laundering, the number of people convicted and the 
amounts confiscated ; 

2.  Takes  the  view  that  the  European  Union's  system  for  combating  money  laundering 
should  be  organised  more  efficiently  and  adapted  in  accordance  with  technical 
developments in financial  transactions ; 

3.  Calls  on  the  Commission,  therefore,  to  report  on  new  types  of  money  laundering 
arising from changes in business practices and money transfers, and to submit appropriate-
proposals for combating it as part of a revision of the Directive ; 

4.  Calls  on  the  Commission,  taking  account  of  the  preliminary  work  of  the  Contact 
Committee,  to submit  a proposal  for a revision  of the  Directive  as quickly  as possible, 
and not later than 6 March  1998, to include within its direct scope those occupations and 
types  of  enterprise  which  can  definitely  be  considered  to  be  involved  or  likely  to  be 
involved directly or indirectly in money laundering ; 

5. Calls on the Member States, insofar as they have not already done so, to extend their 
legislation  on  combating  money  laundering  not  only  to  money  derived  from  drugs 
trafficking  but to all money acquired from professional and organised crime ; 

28 

6.  Welcomes  the  Commission's  aim  of  making  explicit  and  binding  reference  to  the 
provisions  of  the  money  laundering  directive  in  all  future  partnership  and  association 
agreements  and  stepping  up  cooperation  with  the  respective  contracting  parties  in  this 
field  ; 

7.  Calls  on  the  Member  States  to  ratify  and  apply  the  UN  Convention  against  Illicit 
Traffic 
in  Narcotic  Drugs  and  Psychotropic  Substances  adopted  in  Vienna  on  19 
December  1988  and  the  Council  of  Europe  Convention  on  laundering,  tracing,  seizure 
and  confiscation  of proceeds  of crime  opened  for  signature  in  Strasbourg  on  8  November 
1990, which the  Member  States undertook  to do  in the 'Declaration  by  the  representatives 
of  the  governments  of  the  Member  States  meeting  within  the  Council'  published  in  the 
annex  to the  Money  Laundering  Directive ; 

8.  Considers  that  appropriate  procedural  provisions  should  exist  or  be  introduced  in  all 
Member  States to make  it possible : 

(a)  for  surveillance  of  telecommunications  to  be  ordered  if  there  are  grounds  for 
suspecting  that  a money  laundering  offence  has  been or  is about  to be  committed, 

(b)  for  temporary  measures,  such  as provisional  impoundment  and  seizure, to  be taken  to 
prevent  the  exchange,  transfer  or  disposal  of  financial  property  derived  from  money 
laundering  or criminal  offences  giving rise to  it, 

(c)  for  temporary  measures  as  referred  to  in  (b)  to  be  taken  if  the  competent  authorities 
have  information  constituting  adequate  grounds  for  suspecting  an  offence, 

(d)  for  the  proceeds  of  money  laundering  or  criminal  offences  giving  rise  to  it  or  the 
financial  property  acquired  with  these  proceeds to be confiscated  ; 

9.  Calls  on  the  Member  Stales  to  continue  their  work  on  the  Europol  Convention  with  a 
view  to  conferring  on  the  Court  of  Justice  of  the  European  Communities  the  jurisdiction 
called  for  by  Parliament  pursuant  to Article  K.3(2), second  indent  (c), third  subparagraph, 
and  subsequently  to ratify  and apply  the Convention  ; 

10.  Hopes  that  the  authorities  of  the  Member  States  which  are  responsible  for  applying 
the provisions  of the  Directive will  use the avenues of cooperation  which  exist ; 

11.  Stresses  that,  in  order  properly  to  carry  out  their  duties  of  registration  and 
notification,  partly  in accordance  with  Article  5 of the  money  laundering  directive,  banks 
and  financial  institutions  must  have  trained  staff  and  monitoring  capacity  in  order  to  be 
able  to  provide  the  requisite  expert  clarification 
in  the  event  of  suspected  money 
laundering  ; 

12.  Calls  on  the  Commission  to  set  up  a  system  of  appropriate  incentives  to  ensure  that 
the  individual  banks  and  financial  institutions  have  trained  staff  and  effective  monitoring 
along  the lines of those  proposed  in paragraph  11 ; 

29 

13.  Considers  that  both  credit  and  financial  institutions  as  referred  to  in  the  second 
Directive  on  the  coordination  of  banking  law  and  all  other  natural  and  legal  persons  who 
carry  out  financial  transactions,  or  activities  particularly  likely  to  be  used  for  money 
laundering,  commercially  or on  behalf  of third  parties  should  actually  be  included  within 
the scope of the Directive  and  subject  to state supervision  ; 

14.  Considers  furthermore  that  this  supervision  should  be  exercised  in  accordance  with 
uniform  criteria throughout  Europe ; 

15.  Requests  the  Commission,  pursuant  to  Article  17  of  the  Directive  (91/308/EEC),  in 
its  second  report  on  the  implementation  of  the  directive,  to  report  on  the  possible 
monetary  effects  that potentially  stem  from  illegal money  transactions  such as : 

(a)  the  velocity  of  money  affected  by  flow  of  illegal  funds  moving  between  countries  of 
origin  and  of  destination, 

(b) the impact on money  supplies of countries  involved  in the circuit of  laundering, 

(c) the form  of investment  illegal  funds,  once  laundered, could  take, 

(d) the transmission  of monetary  policy  in countries  involved, 

(e)  the  stability  of  financial  markets  situated  in  the  circuit  of  money  laundering  and  of 
final  destination  ; 

16.  Also  requests  the  Commission,  in  its  second  report  to  act  against  the  causes  and 
activities  of  illegal  money  transactions;  measures  contributing  to  a  solution  of  the 
problem  should  be adopted  such  as 

(a)  including  articles  in  trade  agreements  concerning  money  laundering  to  require  and 
ensure that partner countries  adopt  equivalent  standards to those of the  European  Union, 

(b)  strengthening  articles  in  the  European  Agreements  with  the  countries  of  Central  and 
Eastern  Europe  concerning  money  laundering  to  require  and  ensure  that  associated 
countries adopt equivalent  standards  to those of the  European  Union, 

(c)  strengthening  articles  in  the  Agreements  on  Partnership  and  Cooperation  with  the 
Russian  Federation  and  the  New  Independent  States  of  the  former  Soviet  Union  on 
money  laundering  to  require  and  ensure  that  associated  countries  adopt  equivalent 
standards to those of the European  Union, 

(d) the drawing  up of a list of'clean'  banks, 

(e) ensuring that the Commission  and  its subcontractors  deal only  with 'clean'  banks, 

(f)  the  vigilant  enforcement  of  prudential  supervision  within  the  European  Union  with 
regard  to the  licensing and  operation  of banks, 

including  articles 

the  adoption  of  Prudential 
(g) 
Supervision  standards  to  require  and  ensure  that  partner  countries  adopt  equivalent 
standards to those of the  European  Union  ; 

trade  agreements  regarding 

in 

30 

1 J. Wishes  to  have  conclusive  proof  that  money  laundering  is  on  the  increase  and  is 
increasingly powerful  in the network of organised crime ; 

18. Wishes to make it clear that money  laundering  can only be tackled  effectively  if it is 
tackled on a Europe-wide basis under single control and working in close liaison with the 
USA; 

19.  Calls  furthermore  on  the  Commission  to  propose  a  measure  prohibiting  financial 
involvement  in  criminal  activities  and  criminalising  such  involvement  in  the  Member 
States, Article  100a of the EC Treaty to be used as the legal basis for this measure ; 

20.  Calls on the  Member  States to  step  up action  against  money  laundering  and  to  give 
support  to  citizens  and firms, by  providing  information,  so as to  be able  to  prevent  any 
involvement in money laundering ; 

21.  Instructs  its  President  to  forward  this  resolution  to  the  Council,  Commission  and 
governments of the Member States. 

ANNEX  3 

Signature, ratification  and implementation of the Vienna and Strasbourg  Conventions 

Vienna Convention 

Strasbourg  Convention 

Signature 

Ratification 

Implementation 
Art. 3-9 

Signature 

Ratification 

Entry  into force 
Implementation 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

N 

N 

N 

Y 

Y 

Y 

N 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

N 

N 

N 

Y 

Y 

Y 

N 

Y 

Y 

Y 

Y 

Y 

Y 

Belgium 

Denmark 

Germany 

Greece 

Spain 

France 

Ireland 

Italy 

Luxembourg 

Netherlands 

Austria 

Portugal 

Finland 

Sweden 

United 
Kingdom 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

Y 

32 

ANNEX  4 

Criminal activities covered by the Member States' anti-money  laundering 
legislation 

Belgium 

The  Penal  Code  (Article  505)  covers  the  laundering  of  the  proceeds  of  all  crimes. 
The  specific  anti-money  laundering  legislation  (Law  of  11-1-1993,  as  amended)  covers 
the  laundering  of  proceeds  linked  to  crimes  involving:  terrorism,  organised  criminality, 
drugs  trafficking,  illicit  trafficking  in  arms  and  other  goods,  trafficking  in  clandestine 
labour,  trafficking  in  human  beings,  prostitution,  illegal  use  of  hormones  in  animals, 
trafficking  in human organs or tissues, fraud  prejudicing the financial  interests of the EU, 
serious  and  organised  tax  fraud,  corruption  of  public  officials,  investment  irregularities, 
swindling,  hostage-taking,  theft  or  extortion  with  violence  and  threats  and  fraudulent 
bankruptcy; 

Denmark 

The  Danish  Money  Laundering  Act  refers  to  assets  originating  from  violation  of  the 
Danish  Criminal  Code  (i.e. all  crimes).  However,  "money  laundering"  is not  a  separate 
offence  under Danish law but is dealt with under two "receiving" sections of the Criminal 
Code  - S  191(a), which  makes  it an offence  to receive profit  from  a drug  offence  under 
S  191 and S 284, which creates an offence  of accepting profits  or helping others to  enjoy 
profits  from  theft,  misappropriation  of  objects  found,  embezzlement,  fraud,  computer 
fraud,  breach  of  trust,  extortion,  fraud  against  creditors,  smuggling  of  a  particularly 
serious nature and robbery. 

33 

Germany 

Money  laundering  is  a  criminal  offence  pursuant  to  Section  261  of  the  Criminal  Code 
(Money  laundering  ;  disguising  of  illegal  assets).  The  money  laundering  predicate 
offences  are as follows : 

-  all  major  crimes  (Verbrechen)  (i.e.  all  offences  carrying  a  minimum  of  one  year's 
imprisonment,  e.g.  serious  forms  of trafficking  in people,  theft  and  receiving  as well 
as illegal trade in drugs and arms ; 

-  all less serious crime (Vergehen) under Section 29, subsection  1, first sentence No  1  of 
the  Narcotics  Act  (  Betàubungsmittelgesetz)  or  Section  29,  subsection  1  of  the 
Commodities  Control  Act (Grundstoffïiberwachungsgesetz),  in particular  illegal  trade 
in narcotics and precursors (a  'Vergehen'  is an offence  carrying  a minimum  sentence 
of less than one year's imprisonment or a fine) ; 

-  certain  'Vergehen'  involving  property,  fraud,  document  and  corruption  offences 
committed  on  a  commercial  basis  by  a  member  of  a  gang  formed  for  recurrent 
commission of such offences  (e.g. commercial and gang fraud) ; 

-  all Vergehen committed by a member of a criminal  association  within the meaning of 

Section  129 of the Criminal Code (e.g. extortion, procuring and illegal gaming). 

On  16  January  1998  the  Bundestag  passed  the  draft  law  to  improve  the  fight  against 
organised  crime.  This  will  extend  considerably  the  catalogue  of  predicate  offences, 
especially in the field of organised crime. 

Greece 

The  Greek  Money  Laundering  Law  covers  trafficking  in  drugs  and  weapons,  robbery, 
blackmail,  kidnapping,  serious  larceny,  embezzlement  or  fraud, 
illegal  trade  in 
antiquities, theft of cargo of a vessel, illegal trade in human tissue and organs, smuggling, 
nuclear crime, prostitution, illegal gambling. 

Spain 

The Penal  Code article  301 covers money  laundering  under the section  on receiving  and 
similar  offences.  It  refers  to  all  serious  crime  (any  crime  carrying  a  prison  sentence  in 
excess of 3 years). The offence  is considered  to be aggravated  when  it relates to a drugs 
trafficking  offence. 

The Spanish  Money  Laundering  Law (of 23-12-1993) has as its objective  to combat  the 
laundering of the proceeds of organised crime, terrorism and drugs  trafficking. 

34 

France 

Law No  96-392  of  13-5-1996  amending  the Penal  Code extended  the  offence  of money 
laundering to the proceeds of all crimes ("crimes" or "délits"). 

Ireland 

The  Criminal  Justice  Act  1994  criminalises  the  laundering  of  the  proceeds  of  "drug 
trafficking  or other criminal activity". 

Italy 

Law  328/1993  modified  articles  648bis  and  ter  of  the  Criminal  Code  to  criminalise  the 
laundering  of  the  proceeds  of  all  intentional  criminal  activities  ("tutti  i  delitti  non 
colposi"). 

Luxembourg 

Current legislation only covers offences  linked to drug-related money  laundering. 

However,  a  draft  law  currently  before  the  Luxembourg  Parliament  would  extend  the 
range  of  predicate  offences  to  any  crime  (carrying  a  penalty  of  more  than  5  years 
imprisonment),  to  offences  ("délits")  involving  organised  crime  and  to  certain  offences 
involving minors, prostitution, corruption of young people and arms and munitions. 

Netherlands 

The  definition  of  the  crime  of  receiving  in  the  Criminal  Code  (Articles  416  -  417bis) 
covers the proceeds of any serious offence  ("misdrijf). 

Austria 

The Austrian  Penal Code (Articles  165 and 278a) criminalises the laundering of all assets 
derived  from  serious crime, namely all crimes ("Verbrechen") which, under Article  17(1) 
of the Criminal Code, carry a sentence of 3 years imprisonment. 

35 

Portugal 

Decree  Law  15/93  made  drug  and  precursor  trafficking  a  criminal  offence  and 
criminalised  money  laundering.  Decree  Law  313/93  transposed  the  money  laundering 
directive  into  Portuguese  law  and  Decree  Law  325/95  extended  the  range  of  predicate 
terrorism,  arms  trafficking,  extortion,  kidnapping,  prostitution,  corruption 
offences  to 
and various serious economic and financial  crimes. 

Finland 

The  money  laundering  relevant  offence  in  the  Finnish  Penal  Code  (the  term  "money 
laundering" is not used) covers the proceeds of all  offences. 

Sweden 

It is an offence  to launder the proceeds of serious crime. Chapter 9 of the  Swedish  Penal 
Code, on receiving,  states  that  it  is an offence  to  intentionally  or  by  negligence  launder 
the proceeds of any serious criminal offence  carrying a penalty  of imprisonment  of more 
that  6 months.  Complicity  in  money  laundering  is  also  criminalised.  The  term  "money 
laundering" is not, however, used in the Penal Code. 

United Kingdom 

There is no general definition  of the term "money  laundering" in the primary  legislation. 
In  effect  it  is  an  offence  to  launder  the  proceeds  of  serious  crime.  This  would  include 
drug  trafficking,  terrorism,  theft  and  fraud,  robbery,  forgery  and  counterfeiting,  illegal 
deposit  taking, blackmail  and  extortion  (essentially  any  conduct  which  would  constitute 
an "indictable offence"  in the UK). 

36 

ANNEX  5 

Action plan to combat organised crime 

26.  In  the  field  of  money-laundering  and  confiscation  of  the  proceeds  from  crime,  the 
following  measures should be envisaged : 

(a) to improve the international exchange of police data, it is necessary to set up a system 
for  exchanging  information  concerning  suspected  money-laundering  at  the  European 
level,  in  conformity  with  the  relevant  rules  relating  to  data  protection.  To  this  end,  the 
Europol  Convention  should  be  supplemented  with  a provision  permitting  Europol  to be 
instrumental therein (see political guideline No  10) ; 

(b) criminalisation  of  laundering  of the proceeds of crime  should  be made as general  as 
possible, and a legal basis should be created for as broad as possible a range of powers of 
investigation  into  it.  The  opportunity  of  extending  laundering  to  negligent  behaviour 
should  be  examined.  A  study  should  be  undertaken  with  a  view  to  strengthening  the 
tracing  and  seizure  of  illegal  assets  and  of  the  enforcement  of  court  decisions  on  the 
confiscation  of assets of organised crime (see political guideline No  11) ; 

(c)  confiscation  rules  should  be  introduced  which  enable  confiscation  regardless  of  the 
presence of the offender,  such as when  the offender  has died  or absconded  (see  political 
guideline No  11) ; 

(d)  there  should  be  a  study  of  the  possibility  to  share,  at  the  level  of  Member  States, 
assets, confiscated  following  international cooperation (see political guideline No  11 ) ; 

(e)  the  reporting  obligation  in  Article  6  of  the  Money-Laundering  Directive  should  be 
extended  to  all  offences  connected  with  serious  crime  and  to  persons  and  professions 
other  than  the  financial  institutions  mentioned  in  the  Directive.  Member  States  should 
examine the opportunity  of making the failure  to report  suspicious  transactions  liable to 
dissuasive  sanctions  (see political  guideline No  11). At the  same time, fiscal  authorities 
should  be  subjected  in the national  law to a similar reporting  obligation  for  transactions 
connected  with  organised  crime,  at  least  for  transactions  relating  to  VAT  and  excise. 
Cooperation between contact points under the Directive need to be improved ; 

(f}  addressing  the  issue  of  money-laundering  on  the  Internet  and  via  electronic  money 
products  and  requiring,  in  electronic  payment  and  message  systems,  that  the  messages 
sent give details of the originator and the beneficiary  (see political guideline No  11) ; 

(g) preventing an excessive use of cash payments and cash currency exchanges by natural 
and  legal  persons  from  serving  to  cover  up  the  conversion  of  the  proceeds  from  crime 
into other property (see political guideline No  11) ; 

37 

Moreover,  the  Council  and  the  Commission  should  consider  in  the  light  of  existing 
national  and  international  instruments  the  need  to  put  in  place  common  provisions  to 
combat organised  crime  in the fields of economic and commercial  counterfeiting  as well 
as counterfeiting  and  falsification  of banknotes  and  coins  in view  of the  introduction  of 
the single currency. 

Target date : end  1998. 

Responsible  : Council/Europol/Commission. 

38 

ANNEX  6 

Non-financial  sector activities covered by the Member States' anti-money 
laundering legislation 

Belgium 

A draft  law will extend coverage to notaries, bailiffs  (huissiers de justice), 
accountants and auditors, estate agents, casinos and transporters of  funds 

Denmark 

Casinos 

Germany 

Casinos, auctioneers, other businesses not already  subject to the obligation 
to  cooperate  under  the  money  laundering  law  and  any  person  who 
administers another person's assets against payment 

Greece 

Casinos 

Spain 

France 

Ireland 

Italy 

Casinos, real-estate management companies, estate agents, jewellers, 
antique dealers, institutions involved in numismatics and philately 

All persons who professionally  advise upon, execute or control operations 
involving  capital movements are obliged to notify  the authorities of any 
transactions which they know to be related to money laundering. Certain 
limits are also placed on cash transactions. 

Government has announced its intention to cover solicitors, auctioneers, 
estate agents and accountants 

Transactions over LIT 20 million must be carried out through a financial 
intermediary. 

New  legislation  adopted  in  1997  provides  for  an  accelerated  procedure 
whereby  non-financial  activities  can  be  brought  under  the  anti-money 
laundering  legislation. 

Luxembourg  The draft  law covers casinos, games of chance, auditors and notaries. 

Netherlands  Casinos.  Notaries  have  announced  voluntary  scheme  to  report  very 

suspicious transactions indicating serious cases of money laundering. 
Lawyers and accountants already have a similar arrangement. 

Austria 

Casinos 

Portugal 

Casinos, real  estate agents (brokers and dealers), real  estate  management 
companies,  companies  organising  gambling  or  lotteries,  antique/art 
dealers, jewellers, aircraft,  boat and car dealers 

39 

Finland 

(Draft  legislation covers casinos, betting offices  and real estate agents) 

Sweden 

Companies administering trusts 

UK 

The  principal  legislation  covers  all  persons.  The  money  laundering 
regulations  cover  all  persons  and  institutions,  including  lawyers  and 
accountants,  when  undertaking  banking,  investment  or  insurance-related 
business. 

40 

ANNEX  7 

Financial intelligence units 
Findings of the Egmont Group as regards cooperation / exchange of information 

General possibility of bilateral agreements /direct  exchange of information 

1. For intelligence purposes 

Italy, Portugal, Sweden 

2. For intelligence purposes and for criminal investigation or prosecution purposes 

Belgium, France, Netherlands, Spain, UK 

Limited 

Austria 

No  exchange  with  administrative  units  ;  no  law  enforcement 

information 

Denmark, Germany, 

Luxembourg 

No exchange with administrative units 

Ireland 

No exchange with administrative units and judicial  authorities 

Finland (FSA) 

No  exchange  with  police  or  judicial  authorities  ; 
enforcement  information 

no  law 

41 

ANNEX  8 

Number of suspicious transaction reports 

MEMBER  STATES 

1994 

1995 

1996 

1997 

Belgium* 

Denmark 

Germany 

Greece 

Spain 

France 

Ireland 

Italy 

Luxembourg9 

Netherlands 

Austria 

Portugal 

Finland 

Sweden 

2183 

200 

3282 

684 

3926 

174 

2935 

163 

866 

5771 

254 

3289 

670 

902 

7747 

38 

1213 

199 (part) 

378 

1034 

2961 

3218 

75 

77 

(unusual) 
(suspicious) 

14 753 
3546 

15 007 
2994 

16 087 
2 572 

+/-17 000 

346 

17 

223 

429 

310 

85 

190 

391 

301 

115 

232 

502 

129 

206 

909 

United Kingdom 

15 007 

13 170 

16 125 

14 148 

8 

The figures  for  Belgium  relate to 564, 795,  1317 and  1484 cases respectively. 

c>  The reports for the two years relate to 901 and 3264 transactions respectively. 

42 

ANNEX  9 

Results of the reporting system, prosecutions and convictions 

Belgium 

Denmark 

Cases  transmitted  to  the  Crown  Prosecutor:  1994  -  117;  1995  -  !49  ; 
1996 -  321 and  1997 -  495.  Since  1994 there have been convictions in 48 
cases following  reports from  the Belgian FIU to the judicial authorities. 

Comprehensive  statistics  on 
prosecutions  and  convictions  are  not 
available, though it is known that there have been a number of convictions 
for  drug  money  laundering  (7  in  1994  and  5  in  1995).  As  regards  the 
results  of  the  reporting  system,  35  reports  have  resulted  in  26  cases 
(various  offences)  in  which  49  persons  have  been  convicted  or  have 
agreed to pay administrative fines. One person has been acquitted. 

Germany 

16 persons were convicted  in  1994, 15 in  1995 and 24 in  i 996. 

Greece 

Spain 

France 

Of the  38 cases  reported  to the  Committee  set  up under  Law  No 2331  of 
24.8.1995,  13 cases have been sent to the Public Prosecutor 

Suspicious  transactions 
1995-  19, 1996-  165. 

passed  on  to  police  or  judicial  authorities 

Dossiers  passed  to  judicial  authorities  :  1994  -  22  ;  1995  -  30  : 
1996  -  47  ;  1 9 9 7 - 7 5.  As  of  end  96,  there  had  been  34  definitive 
convictions  (25 since  1993).  However, this figure  is not exhaustive, other 
cases being prosecuted  under the heading of receiving  ('recel'). 

Ireland 

One conviction obtained to date. 

Italy 

Convictions  for  money  laundering  under  Art  648 bis  (money  laundering) 
and  Article  648ter  (use  of  money,  goods  or  assets  of  unlawful  origin)  : 
1993 -  72 and  1 ;  1994 -  58 and 4 ;  1995 -  62 and 3 ;  1996 -  116 and 9. 
Suspicious  transaction  reports  have  led  to  85  penal  proceedings  being 
initiated,  16 for money  laundering and 69 for other  offences. 

Luxembourg  Two domestic cases are currently  pending 

Netherlands  No  precise  statistics  on  money  laundering  prosecutions  and  convictions. 
Approx. 5 000 "receiving'' cases are investigated  annually. 

43 

Austria 

Portugal 

Finland 

Sweden 

UK 

A  formal  accusation  has been  made  in  13 proceedings.  These  have  led  to 3 
convictions  (1  in  1994 and  2  in  1995), one  of which  involved  two  persons; 
Four  trials  ended  in  acquittal.  In  one  of  the  proceedings  which  led  to  a 
conviction,  another  Member  State  was  requested  to  take  proceedings 
against  other  persons. 

The  reports  gave  rise  to  12  investigations  in  1994,  49  in  1995  and  53  in 
1996.  Prosecutions  were  launched  in  3  cases,  involving  26  persons.  One 
person  was  convicted  in  1996 

Between  1994  and  1997,  119  suspicious 
reports  were 
transferred  to  pre-trial  investigations,  leading  to  70  criminal  cases.  Of 
these  cases,  by  end  1997  the  Courts  had  passed  judgement 
in  13. 
Proceedings  were  pending  in  4.  Charges  were  being  considered  in  4.  21 
cases  were dropped  and  pre-trial  investigations  were  still  continuing  in 28. 

transaction 

A  total  of  66  reports  were  passed  to  the  prosecution  authorities  for 
preliminary  investigation  in  the  period  1994  -  97.  Over  the  same  period 
there  were  21 judgements. 

Between  1993  and  1996  there  were  25  convictions  for  money  laundering, 
of  which  13  in  1996.  Although  only  1 prosecution  for  money  laundering 
resulted  from  a  suspicious  transaction  report  there  were  over  200  known 
prosecutions  for  other  offences  in  1996  as  a  result  of  reports  passed  on  to 
police  or  investigative  authorities. 

44 

ISSN 0254-1475 

COM(98) 401  final 

DOCUMENTS 

EN 

09  11  06  10 

Catalogue number  :  CB-C0-98-412-EN-G 

ISBN 92-78-37459-8 

Office for Official  Publications of the European Communities 

L-2985 Luxembourg