Communication from the Commission to the Council and the European Parliament on the prevention of and fight against organised crime in the financial sector
Date: 2004-04-16
Institutions: European Commission
Subjects: administrative cooperation, fight against crime, financial market, fraud against the EU, organised crime

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.4.2004 
COM(2004) 262 final 

COMMUNICATION FROM THE COMMISSION  
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 

ON THE PREVENTION OF AND FIGHT AGAINST ORGANISED CRIME  
IN THE FINANCIAL SECTOR 

EN 

   EN 

 
 
 
  
TABLE OF CONTENTS 

EXECUTIVE SUMMARY........................................................................................................ 3 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

2.6. 

2.7. 

2.8. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

3.6. 

3.7. 

4. 

4.1. 

4.2. 

5. 

PROBLEM SCOPING................................................................................................. 4 

OVERVIEW OF MEASURES TAKEN AND POSSIBLE FUTURE ACTION IN 
THE FIGHT AGAINST ORGANISED FINANCIAL CRIME .................................. 5 

Money Laundering....................................................................................................... 5 

Existing Community Anti-Money Laundering Legislation – The First and Second 
Money Laundering Directives...................................................................................... 6 

The Third Money Laundering Directive and other possible policy actions................. 7 

Other existing anti-money laundering measures and possible future policy measures 9 

Financial Intelligence Units ....................................................................................... 13 

Fraud (other than against the financial interests of the Communities) ...................... 14 

Protecting the Community’s Financial Interests ........................................................ 15 

Protecting the EURO ................................................................................................. 17 

HORIZONTAL TOOLS TO STRENGTHEN THE FIGHT AGAINST 
ORGANISED FINANCIAL CRIME ........................................................................ 18 

Transparency of certain legal entities ........................................................................ 18 

Co-operation between the private and public sectors ................................................ 19 

Financial investigation ............................................................................................... 20 

Statistics and benchmarking....................................................................................... 21 

Crime proofing ........................................................................................................... 21 

Policy evaluation and monitoring .............................................................................. 22 

Training Programmes, Workshops and Studies ......................................................... 22 

POLICIES TO SUPPORT THE IMPLEMENTATION OF MEASURES TO 
PREVENT AND FIGHT ORGANISED FINANCIAL CRIME ............................... 22 

Funding measures to fight against organised financial crime.................................... 22 

Enhancing external action in the fight against organised financial crime ................. 22 

CONCLUSION .......................................................................................................... 23 

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1 

EXECUTIVE SUMMARY 

The  aims  of this  Communication are to provide an overview  of action taken in the 
prevention  of  and  fight  against  organised  crime  in  the  financial  sector  (“organised 
financial  crime”)  and  to  discuss  policy  action  which  could  strengthen  the  fight 
against  this  type  of  crime.  For  the  purposes  of  this  Communication,  organised 
financial  crime  is  taken  to  mean  activities  of  organised  crime  groups  which  abuse 
financial or payment systems with a view to financial gain, a definition which is wide 
enough to embrace certain recent scandals in the corporate sector.  

The  importance  of  the  fight  against  organised  financial  crime  goes  beyond  the 
specific crime itself since, if successful, it attacks the very foundations of organised 
crime  networks,  namely  the  maximisation  of  profit  by  illicit  means.  Depriving 
organised  criminals  of  the  ability  to  launder  money  or  to  finance  criminal  activity 
significantly impedes their motivation and ability to function.  

Since  the  terrorist  attacks  of  11th  September  2001,  it  has  become  increasingly 
apparent  that  terrorist  networks  use  organised  crime  methods  to  acquire,  move  and 
launder assets. Accordingly, this Communication is also relevant to the fight against 
terrorist financing. Issues specific to terrorist financing are further developed in the 
Commission’s Communication on Terrorism and other serious crime.1 

Investigations  of  organised  financial  crime  generally  require  a  multi-disciplinary 
approach,  including  accounting,  auditing,  legal,  fiscal  and  banking  expertise.  Co-
operation  between  private  and  public  sectors  based  on  a  common  objective  of 
reducing  the  harm  of  organised  financial  crime  could  facilitate  access  to  relevant 
expertise  and  promote  mutual  confidence  in  each  other’s  ability  and  willingness  to 
investigate and reduce the incidence of such crime.  

Law enforcement authorities should be encouraged as a routine matter to undertake 
financial  investigations  which  are  not  limited  to  the  specific  crime  but  investigate 
more  broadly  the  surrounding  criminal  networks  including  the  identification  of 
proceeds  of  crime,  gather  intelligence  regarding  the  behaviour  of  suspects  in 
conformity  with  data  protection  provisions,  and  attempt  to  identify  the  ultimate 
beneficiaries of organised financial crime. This will also help ensure an intelligence 
led approach to investigations.  

Complex  money  laundering  arrangements  taking  advantage  of  the  ease  of 
incorporating legal entities, the use of nominees and employing a range of devices to 
cloud  identification  of  the  true  beneficial  owner  facilitate  the  carrying  out  of 
organised  financial  crime.  The  issue  of  transparency,  including  the  use  of  financial 
havens  and  special  purpose  vehicles,  as  illustrated  most  recently  by  the  Parmalat 
scandal,  should  therefore  be  addressed  as  an  important  aspect  of  the  fight  against 
organised financial crime.  

Commission Communication on measures to be taken to combat terrorism and other forms of serious 
crime, in particular to improve exchanges of information, adopted by the Commission on 29.3.2004 -
COM(2004)221 

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Measuring  organised  financial  crime,  evaluating  the  effectiveness  of  policy, 
assessing  trends  and  possible  threats  require  implementation  of  a  coherent 
statistical  apparatus  to  allow  production  of  reliable  and  comparable  statistics  on 
organised  financial  crime.  In  addition,  systems  to  allow  tracing  of  the  law 
enforcement  process  and  other  follow  up  of  data  provided  to  Financial 
Intelligence  Units  under  anti-money  laundering  rules  should  be  enhanced  to  help 
monitor the impact of anti-money laundering rules. 

Profit  is  the  main  goal  of  organised  crime  groups.  It  follows  that  removing  the 
proceeds  and  instrumentalities  of  crime  is  probably  the  most  effective  way  of 
tackling  organised  crime.  There  is  a  clear  need  for  effective  asset  seizure  and 
confiscation  systems.  Use  of  duly  empowered  asset  recovery  bodies  possibly,  as 
exemplified by certain Member States, with the ability to use civil remedies towards 
asset recovery in appropriate cases, merits further consideration in this context. 

Whilst acknowledging that far-reaching anti-money laundering measures are already 
in  place,  the  Commission  considers  that  evaluation  of  organised  financial  crime  is 
crucial to identifying best practices and the need for legislative or other initiatives in 
this field. A full evaluation of organised financial crime policy and measures in the 
EU should therefore take place in 2005. 

1. 

PROBLEM SCOPING 

This  Communication  addresses  the  problem  of  organised  crime  in  the  financial 
sector.  The  focus  is  therefore  on  non-violent  crime  generally  involving  abuse  of 
financial  and/or  payment  systems  and  resulting  in  illicit  financial  gain.  For  the 
purposes of this Communication, organised crime in the financial sector (“organised 
financial  crime”)  covers  a  range  of  illegal  activities,  including  money  laundering, 
financial  fraud  and  counterfeiting  of  the  Euro  when  committed  by  criminal 
organisations. The latter are defined in the Joint Action of 21st December 1998.2  

Focusing  on  measures  taken  since  the  Tampere  European  Council  of  1999,  which 
reinforced  the  commitment  to  the  fight  against  organised  crime  at  EU  level,  the 
purpose of this Communication is twofold: 

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first,  to  provide  an  overview  of  action  taken  to  date,  either  specifically 
targeting  organised  financial  crime  or  contributing  to  the  global  fight  against 
this form of criminality, and 

second,  on  the  basis  of  this  overview,  to  identify  those  areas  where  new 
initiatives  may  be  needed  to  strengthen  the  fight  against  organised  financial 
crime. 

2 

Article  1  of  the  Joint  Action  of  21  December  1998  (98/733/JHA)  states  “Within  the  meaning  of  this 
Joint Action, a criminal organisation shall mean a structured association, established over a period of 
time,  of  more  than  two  persons,  acting  in  concert  with  a  view  to  committing  offences  which  are 
punishable by deprivation of liberty or a detention order of a maximum of at least four years or a more 
serious  penalty,  whether  such  offences  are  an  end  in  themselves  or  a  means  of  obtaining  material 
benefits and, where appropriate, of improperly influencing the operation of public authorities”. 

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Financial crime is often wrongly perceived as a “victimless” crime. While organised 
financial  crime  may  not  always  impact  directly  on  individuals  (though  many 
examples  exist  where  individuals  suffer  direct  harm),  the  reality  is  that  its  broader 
societal  impact  is  considerable  in  terms  of  lost  revenues,  loss  of  reputation  and 
degradation  of  public  standards.  High  levels  of  such  crime  can  discourage  the 
creation of new enterprises, deter potential investors and distort competition.  

Against  this  background,  the  fight  against  organised  financial  crime  draws  its 
importance not only from the criminal act as such. Where such an act provides the 
basis for committing other, possibly even more serious forms of crime, its financial 
investigation  becomes  a  central  element  of  the  European  Union’s  strategy  against 
organised crime, because organised crime cannot survive without access to money or 
other financial assets. While tackling crime in itself has an impact on the activities of 
criminal  organisations,  tackling  its  core  objective,  profit,  can  be  equally,  or  more, 
effective in putting it out of business. 

In this context, the following considerations merit special attention: 

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So  far  no  attempt  has  been  made  at  EU  level  to  define  precisely  the  term 
“financial crime”, which is made up of a significant number of specific types or 
sub categories of crime. If organised financial crime is to be effectively tackled 
at  EU  and  international  levels,  there  may  be  important  benefits  in  working 
towards  a  common  definition  in  this  area.  This  could  lead  to  a  converging 
policy  approach  and  understanding  of  how  best  to  prevent  and  fight  against 
organised financial crime. 

Civil  law  and  administrative  rules,  procedures  and  sanctions  must  become 
integral  components  of  an  effective  crime  prevention  and  investigation 
strategy,  complementary  to  criminal  law  provisions,  in  particular  in  cases 
where  the  effective  prosecution  of  criminal  or  civil  offences  is  impossible  or 
hindered  by  ineffective  means  of  judicial  co-operation.  Full  and  effective 
administrative  co-operation  and  exchange  of  information  between  relevant 
regulatory and supervisory authorities can play an important role in preventing 
and  addressing  financial  crime.  For  the  effectiveness  of  the  fight  against 
organised  financial  crime,  comprehensive  policies  must  be  elaborated  at 
EU level comprising substantial criminal law and civil law provisions and 
regulatory  dialogue  in  an  integrated  approach  towards  crime  prevention 
and law enforcement.  

2. 

OVERVIEW OF MEASURES TAKEN AND POSSIBLE FUTURE ACTION IN 
THE FIGHT AGAINST ORGANISED FINANCIAL CRIME 

2.1.  Money Laundering 

The fight against money laundering has been a top political priority of the European 
Union for a number of years, based on the need to protect the financial system from 
contamination  and  misuse,  and  to  aid  efforts  to  combat  organised  crime  in  the 
financial  sector.  The  European  Council  stated  in  the  conclusions  of  the  Tampere 
Summit  that  money  laundering  is  at  the  very  heart  of  organised  crime  and  that  it 

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should  be  rooted  out  wherever  it  occurs  and  concrete  steps  must  be  taken  to  trace, 
seize, freeze and confiscate the proceeds of crime3.  

Since  the  September  11,  2001  terrorist  attacks  in  the  USA  money  laundering 
defences  have  been  expanded  to  cover  a  wide  range  of  serious  crime,  including 
terrorist financing4.  

Criminal money, besides being a threat to social and political stability, also puts at 
risk the reputation and stability of financial institutions and the banking and financial 
system in general. This is why the Commission has taken firm action to protect the 
financial system from misuse by money launderers. The Commission is determined 
to continue this work and to develop anti-money laundering legislation in the context 
of  an  ever  more  sophisticated  international  financial  system.  In  order  to  be  as 
effective as possible it is important that these Community initiatives are completed 
by measures taken within the framework of co-operation among the Member States. 

2.2. 

Existing  Community  Anti-Money  Laundering  Legislation  –  The  First  and 
Second Money Laundering Directives 

The need to protect the financial system from misuse and the fear that the application 
of radically different measures in this area could prejudice the proper functioning of 
the  Internal  Market  provided  the  European  Commission  with  the  legal  basis  under 
the  Treaty  for  proposing  Community  legislation.  Two  Community  directives  have 
been adopted in this area, the first in 1991 and the second in 2001. 

The  1991  Money  Laundering  Directive5 is the key instrument  in  combating  money 
laundering.  It  gave  the  force  of  European  law  to  those  of  the  40  FATF6 
Recommendations  dealing  specifically  with  the  financial  sector.  The  40  FATF 
Recommendations  are  considered  to  be  the  de  facto  world  standard  in  the  fight 
against money laundering. On one major point, however, the Directive moved ahead 
of the FATF. While the original 40 Recommendations made the reporting of money 
laundering an option, the Directive already made this an obligation. Essentially, the 
Directive requires financial institutions to identify and know their customers, to keep 
appropriate  records,  and  establish  anti-money  laundering  training  programmes. 
Under the Directive banking secrecy rules have to be suspended where necessary and 
any suspicion of money laundering has to be reported.  

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Conclusion 51 of the Tampere European Council, 15 and 16 October 1999 
In a joint declaration of the Council and Commission modifying the minute to the 2386th session of the 
General Affairs Council of 19th November 2001, it was stated that offences connected to the financing 
of terrorism constitute serious crime for purposes of Directive 91/308/EEC. 
Council Directive 91/308/EEC of 10th June 1991 on prevention of the use of the financial system for the 
purpose of money laundering. The Directive sets outs a framework for credit and financial institutions 
to  tackle  money  laundering.  The  first  Directive  was  based  on  the  original  Forty  Recommendation 
adopted by the Financial Action Task Force. The Directive also set up the Contact Committee (under 
the aegis of the Commission) to facilitate co-ordinated implementation of the Directive and consultation 
between Member States. 
The  FATF  (Financial  Action  Task  Force  on  Money  Laundering),  an  inter-governmental  body 
established by the G-7 Summit in 1989, is the foremost international body devoted to the combating of 
money  laundering  and  terrorist  financing.  The  Task  Force  is  a  "policy-making  body" which works  to 
generate the necessary political will to bring about national legislative and regulatory reforms in these 
areas.  Over  the  years  the  FATF  has  achieved  real  practical  successes  and  has  acquired  considerable 
international standing. The Commission is a full member of FATF alongside all the Member States. For 
further information see: http://www.fatf-gafi.org. 

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The  Directive  also  requires  entities  subject  to  reporting  obligations  to  adopt  a  risk 
based  approach  and  to  examine  with  special  attention  any  transaction  which  they 
regard as likely, by its nature, to be related to money laundering. These entities are 
encouraged  to  detect  vulnerable  areas  of  their  operations,  within  the  framework  of 
their  legal  obligations  and  to  prioritise  their  anti-money  laundering  efforts 
accordingly. 

The  2001  Money  laundering  Directive7,  which  Member  States  should  have 
transposed  into  national  law  by  15  June  20038,  extends  the  concept  of  criminality 
covered  by  the  Directive  to  a  wider  range  of  serious  crime  and  extends  the  anti-
money  laundering  obligations  to  a  wider  range  of  professions  and  activities  than 
covered  by  the  first  Directive.  In  addition  to  the  financial  sector,  it  embraces 
auditors, external accountants, notaries and lawyers, casinos and estate agents. 
The  legal  professions  are  included  only  in  respect  of  certain  high-risk  lines  of 
business  (financial,  property  and  corporate).  The  Commission  is  aware  that  the 
application of anti-money laundering defences to some extent generated a shift from 
traditional  laundering  methods  to  new  forms,  including  the  use  of  cash  payments. 
Given  its  anonymous  character,  this  form  of  money  laundering  has  grown  in 
importance.  The  use  of  large-scale  cash  payments  is  therefore  also  considered  in 
the  Directive  and  Member  States  must  extend  the  obligations  laid  down  in  the 
Directive  to  certain  dealers  in  high-value  goods,  whenever  payment  is  made  in 
cash  and  in  an  amount  of  EUR  15  000  or  more.  Whether  the  existing  Directives 
should  be  modified  to  provide  more  extensive  anti-money  laundering  defences 
in respect of the use of large-scale cash payments is currently being explored. 

The issues of adequate feedback and the sharing of money laundering related data 
between  the  public  and  private  sectors  are  also  covered  in  the  Directive,  which 
provides that Member States must ensure that the institutions and persons subject to 
the Directive have access to up-to-date information from the public authorities on the 
practices  of  money  laundering  and  on  indications  leading  to  the  recognition  of 
suspicious transactions. The Commission will consider whether further measures 
need  to  be  taken  in  this  area.  In  order  to  maintain  the  vigilance  and 
commitment of the private sector players, they must be able to see that the costs 
imposed are generating worthwhile results. 

2.3. 

The Third Money Laundering Directive and other possible policy actions 

Most  Member  States  and  the  European  Commission  took  the  view  that  it  was 
necessary 
the  revised  40  FATF 
Recommendations before pursuing new legislative measures in this area. The revised 
Recommendations were adopted at the FATF Plenary Meeting in June 2003.9 

the  results  of  negotiations  on 

to  await 

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Directive 97/200/EC of the European Parliament and of the Council of 4 December 2001 on prevention 
of the use of the financial system for the purpose of money laundering.  
As  of  end  January  2004  only  nine  Member  States  had  transposed  the  Second  Money  Laundering 
Directive  into  national  law.  These  Member  States  are  Denmark,  Germany,  Netherlands,  Ireland,  the 
United Kingdom, Spain, Belgium, Austria and Finland. 
The new  FATF  40  Recommendations  are available  at www.fatf-gafi.org. The  most  recent  revision of 
the  Forty  FATF  Recommendations  considerably  reinforces  the  "know  your  customer"  principle, 
extends the criminal coverage of money laundering and encourages enhanced international cooperation 
in  the  fight  against  money  laundering.  In  addition  the  revised  40  Recommendations  considerably 

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The  2001  Directive  anticipates  a  third  directive  covering  the  concept  of  predicate 
offences. The Commission has now announced its intention of tabling a proposal 
for  a  3rd  directive  by  June  2004.  On  this  point  the  Commission  favours  full 
alignment  on  the  definition  of  serious  offences  laid  down  in  Joint  Action 
98//699/JHA10. In addition, the Member States are committed to implementing 
the  revised  40  FATF  Recommendations.  The  proposal  for  a  third  directive 
should determine the changes to be made to the existing Directive to ensure that 
the EU standard never falls below the international standard set by the FATF 
notably  in  the  area  of  customer  due  diligence,  which,  in  view  of  the  recent 
Parmalat scandal, should continue to be addressed as an important instrument 
in the fight against money laundering.  

The Commission is considering whether the prohibition of money laundering in 
the  Second  Directive  should  be  extended  specifically  to  cover  financing  of 
terrorism as well. This would mean that the money laundering reporting and other 
obligations  under  the  Directive  would  be  extended  to  cover  any  transaction  which 
might  be  an  indication  of  terrorist  financing.  The  current  definition  of  money 
laundering  does  not  adequately  deal  with  the  case  where  legitimate  money  or 
property is intended for or diverted to terrorist financing purposes.  

The Commission is also considering the introduction in the directive proposal of 
the general principle that employees in credit and financial institutions making 
suspicious  transaction  reports  (STRs)  should  receive  appropriate  protection. 
The  Commission  is  concerned  that  threats  to  employees  of  financial  institutions 
could have a counter-productive effect in the fight against money laundering. 

The  FATF  adopted  on  14  February  2003  interpretative  notes  on  two  of  the  Eight 
Special Recommendations11 on Terrorist Financing (Special Recommendation VI on 
"alternative  remittance  systems"  and  Special  Recommendation  VII  on  "wire 
transfers"),  which  both  deal  with  payment  issues12.  The  Commission  envisages  the 
establishment  of  a  single  payments  area  for  all  kind  of  payments  and  favours 
integrating  these  requirements  into  Community  law.13  Operators  in  the  payments 
sector are calling for fully EU harmonised rules on these aspects in order to ensure a 

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expand the list of the persons and institutions required to participate actively in the fight against money 
laundering. 
Offences  punishable  by  a  deprivation  of  liberty  of  a  maximum  of  more  than  one  year  or,  as  regards 
those States which have a minimum threshold for offences in their legal system, offences punishable by 
deprivation of liberty for a minimum of more than six months. Now replaced by Council Framework 
Decision 2001/500/JHA. 
The Eight Special Recommendations, which were agreed and adopted by the FATF in October 2003, 
are  the  new  international  standard  to  combat  terrorist  financing.  Implementing  these  Special 
Recommendations  should  deny  terrorists  and  their  supporters  access  to  the  international  financial 
system. 
The objective of SR VI is to increase the transparency of payment flows by ensuring that jurisdictions 
impose  consistent  anti-money  laundering  and  counter-terrorist  financing  measures  on  all  forms  of 
money/value  transfer  systems,  particularly  those  traditionally  operating  outside  the  conventional 
financial sector. SR VII was developed with the objective of preventing terrorists and other criminals 
from  having unfettered  access  to  wire  transfers for  moving  their funds  and for detecting  such  misuse 
when it occurs. Specifically, it aims to ensure that basic information on the originator of wire transfers 
is immediately available. 
See in this context Commission Communication on a New Legal Framework for Payments in the 
Internal Market COM(2003) 718 final. Available at Commission homepage 
http://europa.eu.int/comm/internal_market/payments/framework/index_en.htm 

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level playing field (including equal conditions for payment service providers, access, 
cost  of  compliance)  and  for  reasons  of  efficiency  (identical  originator  information 
requirements to allow straight-through-processing”). 

The  Commission  will  continue  to  explore  in  2004  the  sharing  of  anti-money 
laundering  data  (feedback)  between  public  and  private  sectors  and  the  risk  of 
the use of large-cash payments. As far as information sharing is concerned, public 
and  private  sector  efforts  will  be  monitored  in  order  to  establish  whether  further 
Community action is needed in this area.  

The Commission will propose improved procedures for identifying the holders 
and beneficiaries of bank accounts. Although the 2001 Protocol to the Convention 
on  Mutual  Assistance  in  Criminal  Matters  between  the  Member  States  of  the 
European  Union14  (not  yet  ratified)  contains  provisions  on  requests  for  information 
on bank accounts, banking transactions and the monitoring of banking operations, it 
is not clear that the necessary information is always readily available. Banks should 
be under the obligation to be able to respond rapidly to requests for information from 
the competent authorities. 

Apart  from  the  two  money  laundering  directives  mentioned  under  point  2.2,  the 
Commission  presented  on  2  July  2002  a  proposal  for  a  Council  and  Parliament 
regulation on the prevention of money laundering by means of customs cooperation 
(OJ C 227, 24.9.2002, p 575). The money laundering directives govern, inter alia, the 
control of financial resources moving via financial institutions. However, there is a 
risk that this control mechanism could be undermined by large scale movements of 
cash  which  are  not  uniformly  subject  to  control  in  the  Community.  The  proposal 
foresees  a  uniform  approach  to  cash  control  based  on  a  declaration  system  for 
amounts  greater  than  €  15.000.  This  proposed  measure  should,  in  conjunction  with 
the money laundering directives, help to combat laundering of money.  

The  Commission  will  also  continue  to  monitor  and  assess  the  vulnerability  of  the 
Internet  and  developing  communications  technologies  to  exploitation  by  money 
launderers. The growing use of the Internet as a vehicle for financial transactions of 
all  kinds  has  created  concerns  that  certain  transfers  may  escape  the  controls  and 
surveillance mechanisms implemented by EU anti-money laundering rules. 

2.4. 

Other  existing  anti-money  laundering  measures  and  possible  future  policy 
measures 

The  Joint  Action  of  3rd  December  1998  on  money  laundering,  the  identification, 
tracing, freezing, seizing and confiscation of instrumentalities and the proceeds from 
crime15  complements  the  Money  Laundering  Directives  by  addressing  the  need  for 
more  effective  co-operation  between  Member  States  in  this  area.  The  Framework 
Decision16  on  money  laundering,  dealing  with  the  identification,  tracing,  freezing, 
seizing and confiscation of the proceeds  of crime partially replaces the above Joint 
Action.  It  is  intended  to  ensure  that  Member  States  take  the  necessary  steps  not  to 

14 
15 
16 

326/01 of 21.11.2001 
Joint Action 98/699 JHA of 9.12.1998 
2001/500/JHA OJ L 182 of 5/7/2001 The Commission will produce an implementation report on this 
Framework  Decision  before  end  2003  to  enable  the  Council  to  assess  to  what  extent  the  measures 
necessary to comply with the Framework Decision have been taken. 

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make or uphold reservations in respect of a number of specific articles of the 1990 
Strasbourg  Convention17  obliging  Member  States  to  provide  for  confiscation 
measures and to criminalise the laundering of the proceeds of serious offences. The 
Framework  Decision  also  commits  Member  States  to  ensure  that  their  domestic 
legislation allows for the confiscation of property the value of which corresponds to 
the proceeds of crime 

A  Council  Act  of  30th  November  200018  extends  the  competence  of  Europol  to 
money  laundering  in  general  regardless  of  the  type  of  offence  from  which  the 
laundered  proceeds  originate.  To  date  only  six  Member  States  19  have  ratified  the 
Protocol and the remaining Member States should be encouraged to ratify at the 
earliest opportunity. 

The  Protocol  to  the  Convention  on  Mutual  Assistance  in  Criminal  Matters 
established  by  Council  Act  of  16th  October  200120  provides  for  Member  State 
authorities, to provide details of bank accounts, and banking operations of identified 
persons.  Member  States  may  not  rely  on  rules  of  banking  secrecy  as  a  ground  for 
refusing  to  co-operate  in  this  context.  The  Protocol  represents  a  potentially 
important instrument in the fight against organised financial crime. However, it 
has not yet been ratified and Member States should accelerate efforts to give full 
effect to the Protocol.21  

The  draft  Framework  Decision  on  Confiscation  of  Crime-related  Proceeds 
Instrumentalities  and  Property22,  received  political  agreement  at  the  Justice  and 
Home Affairs Council of 19 December 2002. The proposal aims to ensure effective 
rules  governing  the  confiscation  of  proceeds  of  crime  including  in  relation  to  the 
onus of proof regarding the source of assets held by a person convicted of an offence 
related  to  organised  crime.  The  Framework  Decision  on  the  execution  of  orders 
freezing property or evidence23 establishes the rules for recognition and execution of 
freezing orders issued by the judicial authorities of a Member State in the framework 
of criminal proceedings. A draft framework decision establishes a similar approach 
in connection with the execution in the EU of confiscation orders.24  

Possible future policy actions: 

•  Case  tracking:  Member  States  are  encouraged  to  develop  coherent  systems 
capable  of  tracking  data  provided  by  entities  subject  to  anti-money 
laundering  reporting  requirements  in  order  to  demonstrate  the  law 
enforcement  or  other  follow-up  given  to  Suspicious  Transaction  Reports 
(“STRs”).  This  would  allow  the  production  of  specific  and  reliable  data  at 
national  level  in  terms  of  numbers  of  money  laundering  or  predicate  offence 
prosecutions  and  convictions,  asset  confiscations,  investigations  undertaken  and 

17 

18 
19 
20 
21 
22 
23 
24 

Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, Council of 
Europe, November 1990  
Council Act of 30th November 2000 OJ2000/C358/01 
As at February 2004 Germany, Spain, France, Greece, Portugal and Sweden had ratified the Protocol 
2001/C 326/01 of 21.11.2001 
As at 1st November 2003 no Member States had ratified the Protocol  
OJ C184, 2.8.2002, p.3.  
2003/577/JHA of 22July 2003 L196/45 
2002/C184/05 2-8-2002 C184/8 

10 

 
 
  
 
                                                 
arrests  made,  based  on  money  laundering  disclosures.  The  tracking  systems 
should also be capable of indicating data provided by one FIU to another and data 
used  for  related  law  enforcement  purposes.  This  would  require  FIUs,  law 
enforcement, courts and other bodies in the anti-money laundering (“AML”) data 
chain  to  implement  a  statistical  apparatus  capable  not  only  of  collecting  the 
relevant  data  but  also  of  tracing  it  back  to  (or  forwards  from)  the  AML 
disclosure.25 

•  Confiscation  powers:  Recommendation  3  of  the  FATF  40  Recommendations 
encourages  countries  to  consider  confiscation  measures  “without  requiring  a 
criminal conviction or which require an offender to demonstrate the lawful origin 
of  the  property  alleged  to  be  liable  to  conviction”.  Examples  in  some  Member 
States show that the setting up of specialised asset recovery bodies26 can become a 
cornerstone in efforts to deprive perpetrators of crime of their illegal profits and 
assets, by whatever legal means available under criminal and/or civil law.27 These 
would  include  the  power  to  confiscate  assets  without  requiring  a  criminal 
conviction  or  which  require  an  offender  to  demonstrate  the  lawful  origin  of  the 
property  alleged  to  be  criminal  proceeds.28  Establishment  of  asset  recovery 
bodies  at  national  level  should  be  considered.  The  Commission  supports 
Europol’s  efforts  to  set  up  an  “Asset  Seizure  Knowledge  Centre”29  to 
facilitate the identification of criminal assets in the course of major criminal 
investigations  conducted  by  Member  States.  Eurojust  should  also  be 
associated with these efforts. 

•  Reporting 

of 

17 

the  FATF 

requirements:  Recommendation 

40 
Recommendations calls for effective, proportionate and dissuasive sanctions to be 
available  to  deal  with  physical  or  legal  persons  who  fail  to  comply  with  money 
laundering  rules.  The  Money  Laundering  Directives  impose  important  reporting 
and  other  obligations  on  specified  persons.  Consideration  should  be  given  as  to 
whether  the  criminalisation  of  gross  negligence  in  the  failure  to  comply  with 
reporting  obligations  and  other  obligations  such  as  the  carrying  out  of  adequate 
identification  checks,  record  keeping  and  co-operation  with  FIUs,  including  the 
possibility of corporate liability in appropriate circumstances, would improve the 
effectiveness of this aspect of anti-money laundering rules.  

•  Database  of  currency  transactions:  consideration  should  be  given  to  the 
feasibility and need for Member States to establish an electronic database of 
currency  exchange  transactions  above  a  specified  amount  to  be  accessed  by 

25 
26 

27 

28 
29 

See in this context Recommendation 32 of the FATF Forty Recommedations 
Recommendation  17  (b)  of  the  Millennium  Strategy  states  that  Member  States  should  consider 
establishing “units which are specifically dedicated to the process of tracing, seizure and confiscation of 
assets…” and should also examine whether such units’ “manpower, operational and technical resources 
are sufficient to combat money laundering”. 
These  examples  have  proved  to  bea  highly  effective  tool  in  removing  the  proceeds  of  crime.  The 
procedure  is  “in  rem”,  i.e.  against  the  property  and  is  independent  of  the  defendant’s  conviction  for 
criminal  activity.  This  allows  law  enforcement  authorities  to  focus  their  activities  on  the  assets  of 
criminal proceeds. Once the criminal origin of the assets has been proved, using the lower civil burden 
of  proof,  the  onus  shifts  to  the  defendant  to  prove  the  legitimate  origin  of  the  assets.  As  regards  the 
United Kingdom’s asset recovery agency, information can be found at http://www.homeoffice.gov.uk/ 
See in this context Recommendation 19 of the Millennium Strategy. 
This centre will provide a full picture of existing asset identification tools within the Member States and 
beyond,  a  description  of  relevant  procedures  and  a  list  of  national  contact  points  to  facilitate 
international co-operation. 

11 

 
 
  
 
                                                 
police and judicial authorities in money laundering investigations, subject to 
data protection requirements.30  

•  Financial havens: Recommendation 14 of the Millennium Strategy stated that an 
instrument  should  be  adopted  in  respect  of  off-shore  and  on-shore  financial 
centres and tax havens operating in Member States’ territory or dependencies, and 
on  a  common  European  Union  policy  towards  financial  centres  and  tax  havens 
lying outside the European Union. Member States should ensure that the FATF 40 
Recommendations and Community Money Laundering Directives are adequately 
implemented  in  off-shore  and  on-shore  financial  centres  and  fiscal  paradises 
operating in dependent territories. As regards financial havens not forming part of 
the dependent territory of the Member States,31 consideration should be given to 
an  appropriate  mechanism  to  facilitate  an  EU-wide  response  where  financial 
havens  are  considered  to  represent  a  significant  money  laundering  threat.32  In 
order  to  prevent  and  unmask  corporate  financial  crime,  the  involvement  of 
financial  centres  and  special-purpose  vehicles  necessitates  particularly  close  co-
ordination between company law regulators, securities market authorities and the 
auditors and audit supervisors. 

•  Underground  banking  and  other  alternative  remittance  systems  are  frequently 
used  by  terrorists  and  other  criminals  for  international  transfer  of  illegal  funds 
since such systems generally leave no paper trail. To ensure adequate monitoring 
and,  where  appropriate,  disruption  of  such  systems,  it  is  necessary  to  encourage 
rapid exchange of information on a case by case basis between law enforcement 
authorities,  FIUs  and  other  relevant  bodies.  This  in  turn  should  promote  co-
ordinated action between domestic and foreign authorities to deter the use of such 
systems for the transfer of illegal funds. To this effect the Commission supports 
and  is  participating  in,  the  establishment of  an  early  warning  system  to  promote 
information  exchange  and  joint  action  to  disrupt  illegal  international  funds 
transfers. 

•  SUSTRANS: the Commission supports and encourages Europol to reinforce its 
anti-money laundering efforts by implementing the computerised evaluation 
of  Suspicious  Transaction  Reports  forwarded  to  the  Analysis  System  of 
Europol  (SUSTRANS),  to  be  based  on  more  systematic  transmission  of 
financial intelligence by Member States. 

Significant anti-money laundering efforts have been made by the private sector 
to  implement  systems  allowing,  among  other  things,  the  identification  and 
reporting of suspicious transactions. As a necessary complement, new initiatives 
are  now  required  from  the  public  sector.  Enhanced  effectiveness  of 
complementary public sector efforts in the fight against money laundering, may 
in  turn  allow  consideration  to  be  given  to  extension  of  obligations  on  financial 
institutions  and  others  under  the  Money  Laundering  Directives.  This  could 
include,  for  example,  broadening  the  definition  of  money  laundering  to 

30 

31 

32 

Recommendation  19  b)  of  the  FATF  Forty  Recommendations  calls  on  countries  to  consider 
establishment of such a database operated by national agencies. 
The Joint Council (JHA/Ecofin) adopted conclusions in October 2000 addressing the question of money 
laundering risks from off-shore and on-shore financial centres and havens. 
In this context, see the announcement of the United States Treasury Department of 19.11.2003 that it 
was  taking  action  to  cut  Myanmar  off  from  the  US  financial  system  by  designating  it  as  a  centre  for 
money laundering.  

12 

 
 
  
 
                                                 
encompass  situations  where  a  person  ought  to  have  known  that  property  is 
derived from criminal activity. 

2.5. 

Financial Intelligence Units 

Cooperation and exchange of information between FIUs 

The Money Laundering Directives call on Member States to designate an authority to 
receive  suspicious  transaction  reports  submitted  by  the  financial  sector  and  from 
certain other activities and professions. These authorities are now generally referred 
to as Financial Intelligence Units (FIUs). All Member States have set up an FIU in 
their  territory.  These  collect  and  analyse  information  received  pursuant  to  the 
Directive.  This  information  is  used  to  produce  financial  intelligence,  aimed  at 
revealing  links  between  suspicious  financial  transactions  and  underlying  criminal 
activity. 

At present, co-operation and exchange of information between Member State FIUs is 
often slow and limited, and is generally not computerised. At the same time, given 
the  frequently  international  nature  of  money  laundering,  efforts  to  combat  this 
phenomenon  could  be  greatly  enhanced  and  improved  results  obtained,  if  available 
financial intelligence were to be exploited to the maximum. In order to promote an 
effective exchange of information between Member State FIUs, a Council Decision 
of  October  200033  called  on  Member  States  to  ensure  that  FIUs  co-operate  to 
assemble,  analyse  and  investigate  relevant  information,  including  the  exchange  of 
information. 

The  Commission,  the  European  Parliament,  the  Council  and  the  European  Council 
have  all  pointed  to  the  need  to  improve  co-operation  among  FIUs.  The  Joint 
ECOFIN/JHA Council of October 2001 called on the Commission to investigate the 
possibility of Community funding for a project in this area. Under the leadership of 
the  Netherlands,  a  pilot  computer  network  currently  linking  seven  FIUs  has  been 
developed.  The  first  results  of  this  project,  called  FIU-NET,  though  modest,  are 
encouraging.  However,  it  is  clear  that  fully  to  design  and  build  an  optimum 
operational  network  linking  all  the  Member  States'  FIUs  will  require  a  substantial 
investment over a number of years. 

The Commission believes this is a worthwhile project that should greatly enhance the 
EU  anti-money  laundering  effort.  Accordingly,  it  is  currently  proposed  that  the 
Commission  should  conclude  a  grant  financing  agreement  with  the  Netherlands 
Justice  Ministry  to  begin  co-financing  a  project  to  develop  and  implement  a  fully 
operational computer network linking all Member State FIUs for the processing and 
exchange of financial intelligence.  

The  FIU-NET  will  make  possible  for  all  the  Member  States'  FIUs  to  exchange 
financial intelligence information through a decentralised computer network; all the 
FIUs should be connected to the existing basic pilot network (FIU-NET). Given the 
clear links with its own work, Europol would be closely involved with this project. 

33 

Council  Decision  of  17  October  2000  concerning  arrangements  for  co-operation  between  financial 
intelligence units of the Member States in respect of exchanging information, (2000/642/JHA), OJL271 
of 24/10/2000, p.4. The Decision also called on Member States to provide for, and agree on, appropriate 
and protected channels of communication between FIUs. 

13 

 
 
  
 
                                                 
On  22  December  2003  the  Commission  formally  decided  to  make  a  grant  to  the 
Netherlands  Justice  Ministry  for  the  development  of  the  FIU-NET  project.  The 
relevant grant financing agreement between the Commission and the Ministry is now 
being finalised. 

It  should  be  noted  that  a  parallel  FIU  network  is  currently  in  the  process  of  being 
established  between  the  FIUs  of  the  accession  states  with  the  backing  of  PHARE 
programme funding. The two networks are being designed and developed so as to be 
fully compatible and to facilitate their merging into a single EU wide network at an 
appropriate moment. 

2.6. 

Fraud (other than against the financial interests of the Communities) 

Non-cash  means  of  payment  (principally  credit  and  debit  cards  and  cheque 
payments) represent an important source of illicit revenue for organised crime groups 
through  fraud  and  counterfeiting.  A  Framework  Decision34  was  adopted  in  2001  to 
ensure that fraud and counterfeiting of non-cash means of payment are recognised as 
criminal offences and are subject to effective sanctions. .  

In  February  2001,  as  a  complement  to  the  Framework  Decision,  the  Commission 
adopted  a  three-year  Action  Plan  to  prevent  fraud  and  counterfeiting  of  non  cash 
payments,35 which aims at fostering a more coherent approach to prevention in this 
area. The Action Plan is based on a close co-operation between the relevant public 
authorities  and  private  parties.  It  includes  a  comprehensive  set  of  non-legislative 
measures  aimed  at  raising  awareness,  exchanging  experience  and  information, 
training,  developing  and  sharing  educational  material.36  The  Action  Plan  was 
strongly supported by public and private stakeholders.  

The Commission will publish in 2004 a report on progress achieved under the Action 
Plan and propose further initiatives. Priority areas will continue to be the security of 
payment products  and  systems, an effective exchange of information and increased 
co-operation  between  relevant  public  authorities  and  between  the  latter  and  the 
private  sector.  Greater  clarification  of  existing  EU  data  protection  legislation  with 
respect  to  fraud  prevention  activities  is  necessary  to  allow  a  wider  cross-border 
exchange  of  information.  The  integration  of  accession  countries  in  the  EU  fraud 
prevention framework and stronger relations with public authorities in third countries 
will  also  continue  to  be  a  priority.  Emerging  threats  will  also  be  addressed.  For 
example,  in  February2004  a  workshop  was  organised  under  the  EU  Forum  for  the 
Prevention of Organised Crime on identity theft – the unauthorised use of a person’s 
identity as a mask in the commission of crime.  

The  effective  fight  against  fraud  requires  enhanced  co-operation  at  all  levels. 
Systems to ensure timely and appropriate data exchange among stakeholders must be 

34 

35 
36 

Council Framework Decision of 28 May 2001 combating fraud and counterfeiting of non-cash means of 
payment,  (2001/413/JHA),  OJ  L  149  of  02/06/2001,  p.1  The  Framework  Decision  covers  theft, 
counterfeiting  or  falsification,  receiving  or  obtaining  and  fraudulent  use  of  payment  instruments  or 
instruments purporting to be payment instruments. The unlawful use of a computer to make a financial 
gain  is  also  covered.  The  Framework  Decision  also  provides  for  co-operation  and  exchange  of 
information between Member States in tackling these offences. 
Preventing fraud and counterfeiting of non-cash means of payment of 9.2.2001 COM(2001) 11 final 
More  information  on  all  the  measures  of  the  Action  Plan  2001-2003  and  their  implementation  is 
available at: http://europa.eu.int/comm/internal_market/payments/fraud/index_en.htm 

14 

 
 
  
 
                                                 
fully  implemented.  Through  the  EU  Forum  for  the  Prevention  of  Organised 
Crime  and  other  groups37,  the  Commission  will  explore  the  scope  for  and 
possible contents of clear guidelines as to how public and private agencies may 
work  together  to  combat  fraud  more  effectively.  The  absence  of  harmonised 
legislation  in  the  fight  against  fraud  is  a  significant  dampener  on  police  and 
judicial co-operation in this area.  

2.7. 

Protecting the Community’s Financial Interests 

The  Community’s  own  resources  suffer  huge  losses  as  a  result  of  fraud,  which 
generates criminal proceeds with low risk and generally mild punishments in case of 
conviction.  

On the basis of Article 280 EC Treaty the Community and the Member States may 
take the necessary measures to counter fraud affecting the financial interests of the 
Community.  As  with  the  1995  Convention  on  the  protection  of  the  European 
Community’s  financial  interests  (in  force  since  17  October  2002),  the  Second 
Protocol to that Convention38 calls on Member States to take measures and exchange 
information  with  the  Commission,  in  order  to  make  legal  entities  liable  for  fraud, 
corruption and money laundering. The Second Protocol has not yet entered into force 
and the two Member States which have not yet ratified it should accelerate efforts to 
do  so  to  ensure  a  more  effective  fight  against  fraud  to  the  detriment  of  the 
Community’s financial interests. 

OLAF plays a fundamental role as investigator and/or coordinator in all areas of the 
protection  of  the  Community’s  financial  interests.  Efforts  to  detect  and  prevent  the 
laundering of proceeds of EC fraud are an important element of the protection of the 
Community’s financial interests. Enhanced cooperation and exchange of information 
with FIUs will have an important impact on OLAF’s efforts in this area.  

Coordinated  mutual  administrative  assistance  and  exchange  of  information  are 
important  elements  in  the  fight  against  fraud.  The  Commission  is  preparing  an 
initiative on mutual administrative assistance for the protection of the Community’s 
financial interests against fraud and other illegal activities. This initiative covers the 
fields  of  vertical  and/or  horizontal  administrative  assistance  and  exchange  of 
information  in  the  areas  of  VAT  fraud,  money  laundering  of  the  proceeds  of  EC 
fraud,  structural  funds  fraud  and  other  areas  of  fraud  that  are  not  yet  covered  by 
secondary EC legislation. 

In  the  field  of  financial  crime  the  initiative  aims  to  make  use  of  the  information 
obtained  on  the  basis  of  the  anti-money  laundering  tools  from  first  and  third  pillar 
legal  instruments  for  the  purpose  of  the  protection  of  the  Community’s  financial 
interests.  This  means  in  particular,  tracing  EC  fraud  through  information  about 
suspicious  financial  transactions.  Also  VAT  fraud  is  a  major  concern  for  the 
Member  States  and  the  European  Community.  VAT  constitutes  in  some  Member 
States  the  most  important  source  of  fiscal  revenue  and  Member  States  VAT  Own 
Resources contribute up to 25% of the Community budget. In addition to the loss of 

37 
38 

For example, the EU Fraud Prevention Experts Group in the area of non-cash means of payment 
Second  Protocol,  drawn  up  on  the  basis  of  Article  K.3  of  the  Treaty  on  European  Union,  to  the 
Convention  on  the  protection  of  the  European  Communities’  financial  interests,  OJ  C  221  of 
19/07/1997, p.12.  

15 

 
 
  
 
                                                 
revenue,  this  fraud  jeopardises  legitimate  trade  in  certain  economic  sectors  and 
hampers the functioning of the internal market. 

Therefore, in June 2001, the Commission made a proposal39 for a new regulation to 
strengthen cooperation between Member State tax authorities to combat VAT fraud. 
The Council adopted this proposal on 8 October 2003, and a new Regulation40 (N° 
1798/2003) on administrative cooperation in the field of VAT entered into force on 1 
January  2004.  This  regulation  has  considerably  improved  the  legal  framework  for 
administrative  cooperation  and  is  therefore  to  be  considered  as  a  major  tool  in  the 
fight against VAT fraud. 

While the new regulation on administrative cooperation was a prerequisite in order to 
improve  Member  States'  cooperation  in  the  fight  against  VAT  fraud,  it  was  also 
necessary  to  accompany  this  legislative  initiative  by  concrete  measures  enhancing 
cooperation  between  tax  administrations  and  officials.  The  Fiscalis  2003-2007 
programme  was  therefore  adopted  by  the  Council  and  the  European  Parliament  in 
order to enhance the day-to-day cooperation between officials. 

In parallel, the Commission has, together with the Member States, carried out an in-
depth  examination  of  VAT  fraud  in  intra-community  trade  and  has  identified  the 
various  measures  that  have  been  taken  at  national  level  and  which  have  given  the 
best  results  in  the  fight  against  "missing  trader  fraud".  In  the  meantime,  several 
Member States are adapting their national control systems, on the basis of these "best 
practices", in order to prevent and disrupt such fraud.  

The  Commission’s  legislative  initiative  for  a  regulation  on  mutual  administrative 
assistance and exchange of information shall provide for a more detailed legal basis 
for  the  much  needed  coordination  role  of  the  Commission  (OLAF)  in  the  field  of 
trans-national VAT fraud. This initiative is complementary to existing legislation, in 
particular Regulation 515/97 regarding mutual assistance on customs and agricultural 
matters as well as Regulation 1798/2003 on administrative assistance in the field of 
VAT fraud. 

However, in addition to what has recently been achieved in this field, there is a need 
to  explore  the  establishment  of  a  common  and  comprehensive  EC  concept  of 
fiscal fraud and the harmonisation of penal sanctions. The Commission intends 
to  launch  a  comparative  study  of  the  respective  definitions  of  fiscal  fraud  and 
their  penal  consequences.  Enhanced  co-operation  in  particular  between  the 
Member  States,  the  Commission  (OLAF),  Eurojust  and  possibly  Europol, 
making  greater  use  of  already  existing  co-ordination  facilities  at  OLAF  level 
and  at  Eurojust,  is  necessary  and  requires  adequate  resources  to  optimise  the 
potential for a more effective partnership.41 

Finally, the creation of an independent European Public Prosecutor responsible 
for  detecting  and  prosecuting  offences  directed  against  the  Community’s 
financial interests, would strengthen the fight against organised financial crime. 

39 
40 
41 

COM(2001) 294 final du 18.6.2001. 
Council Regulation (EC) No 1798/2003. 
See Declaration 2 to the Council Decision extending Europol’s mandate to deal with the serious forms 
of international crime listed in the Annex to the Europol Convention (2001/C 362/02).  

16 

 
 
  
 
                                                 
2.8. 

Protecting the EURO 

The introduction of the euro created the need for closer cooperation among the EU 
Member  States  and  the  adoption  of  common  rules  and  procedures.  In  addition,  it 
called  for  special  action  to  prevent  counterfeiting.  Those  measures  include  a 
Regulation  laying  down  specific  measures  for  the  protection  of  the  euro42  and  of  a 
Framework  Decision  on  criminal  sanctions43.  The  Council  has  also  extended 
Europol’s mandate to deal with forgery of money44 and assigned to the Commission 
the co-ordination of training and technical assistance, through a Decision establishing 
a specific financial programme45. 

The  European  Central  Bank  (“ECB”)  has  established  and  maintains  the  CMS46 
database on counterfeits and analyses new types of counterfeit banknotes. Europol is 
responsible  for  the  transmission  and  analysis  of  information  and  has  established  a 
database including criminal data for use by law enforcement and is strengthening its 
role  in  this  area.  The  Commission  (OLAF)  monitors  the  implementation  of 
legislation  and  prepares  legislative  initiatives,  manages  the  “Pericles”  training  and 
technical assistance programme and analyses new types of counterfeit euro coins. 

Member States have all implemented the Community legislation related to criminal 
sanctions47. They have established National Central Offices for the protection against 
counterfeiting  and  designated  bodies  responsible  for  the  technical  analysis  of 
counterfeits.  They  have  also  introduced  legislation  obliging  credit  institutions  to 
withdraw  from  circulation  and  hand  over  counterfeits  to  competent  authorities. 
Finally,  co-ordinated  by  the  Commission,  Member  States  carry  out  training  and 
technical assistance actions for the protection of the euro. 

The  increasing  use  of  modern  digital  equipment,  which  allows  relatively  easy 
reproduction  of  banknotes  is  under  review  by  the  ECB  and  the  Commission. 
Community  legislation  is  under  consideration  concerning  use  of  the  specific 
in  euro  banknotes48.  Finally, 
machine-readable 
appropriate  common  methods  are  being  examined  for  the  detection  of 
counterfeit  banknotes  and  coins  at  the  level  of  credit  and  other  relevant 
institutions. 

incorporated 

features 

42 

43 

44 

45 

46 
47 

48 

Council  Regulation  (EC)  N°  1338/2001  of  28  June  2001  laying  down  measures  necessary  for  the 
protection of the euro against counterfeiting, OJ L 181 of 4.7.2001 p.6 
Council Framework Decision of 29 May 2000 on increasing protection by criminal penalties and other 
sanctions against counterfeiting in connection with the introduction of the Euro, (2000/383/JHA), OJ L 
140 of 14/6/2000, p.1 
Council  Decision  of  29  April  1999  extending  Europol’s  mandate  to  deal  with  forgery  of  money  and 
means of payment, (1999/C 149/02), OJ C 149 of 28.5.1999, p. 16. 
Council Decision of 17 December 2001 establishing an exchange, assistance and training programme 
for the protection of the euro against counterfeiting (the ‘Pericles’ programme), (2001/923/EC), OJ L 
339 of 21.12.2001 p. 50. 
Counterfeit Monitoring System 
Commission  Reports  based  on  Article  11  of  the  Council  Framework  Decision  of  29  May  2000  on 
increasing protection by criminal penalties and other sanctions against counterfeiting in connection with 
the introduction of the euro, COM(2001) 771 final of 13 December 2001 and COM(2003) 532 final of 3 
September 2003. 
Such European legislation would require all EU-based manufacturers or importers of printers, scanners 
and  image  processing  software,  to  incorporate  appropriate  detectors  into  their  products;  this  could  be 
based on the Counterfeit Deterrence System (CDS) developed by the ECB and other Central Banks. 

17 

 
 
  
 
                                                 
3. 

HORIZONTAL  TOOLS  TO  STRENGTHEN  THE  FIGHT  AGAINST 
ORGANISED FINANCIAL CRIME  

The  European  Commission  intends  to  develop  and  enhance  a  series  of  horizontal 
measures to prevent and fight organised crime in general which are also relevant to 
the fight against organised financial crime. 

3.1. 

Transparency of certain legal entities 

There  is  a  general  need  to  enhance  transparency  and  integrity  standards  in  public 
administrations  and  private  entities  to  prevent  and  discourage  financial  crime  in 
general and thus contribute to the more effective tracing of organised financial crime. 
The  FATF  has  highlighted  the  need  to  facilitate  access  to  information  on  the 
beneficial  ownership  and  control  of  legal  persons,  with  bearer  shares  and  trusts 
requiring  particular  attention.49  The  need  for  greater  transparency  in  beneficial 
ownership was also recognised in the Tampere Conclusions of October 1999.50  

A  report  undertaken  on  behalf  of  the  Commission  51  concluded  that  a  lack  of 
transparency regarding in particular the identification of the beneficial owner, the use 
of  trusts  or  equivalent  instruments  and  use  of  nominees  constituted  obstacles  to 
international co-operation in the fight against money laundering. Recommendations 
33 and 34 of the FATF Forty Recommendations also highlight the risks that bearer 
shares and trusts may be misused for money laundering purposes. 

The  Parmalat  affair  and  other  scandals  have  shown  up  many  failures.  The 
Commission  is  now  implementing  its  corporate  governance  and  company  law 
programme  which  addresses  a  number  of  areas  where  weaknesses  have  been 
revealed.  The  Commission  has  recently  adopted  a  proposal  for  a  directive  revising 
the 8th Company Law Directive on the statutory audit. Issues such as the oversight of 
auditors,  with  independent  oversight  bodies  being  in  charge  are  addressed;  other 
questions considered include group auditors’ full responsibility for the consolidated 
accounts of listed companies; the need for functional and powerful independent audit 
committees in all listed companies; a strengthening of sanctions regimes and whether 
cooperation  at  European  level  of  all  oversight  bodies  should  be  enhanced.  A 
cooperative working model with third country regulators is included. 

Furthermore  work  will  have  to  be  accelerated  on  the  role  of  independent  non-
executive  or  supervisory  directors;  on  requiring  all  Directors  to  be  collectively 
responsible  for  company  accounts;  and  on  ensuring  complete  information  and 
disclosure with regard to a group’s structure and intra-group relations. Where there is 
resort  to  tax  havens  and  special  purpose  vehicles,  reflection  is  continuing  as  to 
whether such special operations should be listed in company accounts, their purpose 
should be explained and the group auditor should be responsible for checking that the 
description corresponds to reality. 

49 
50 

51 

See in particular Recommendations 33 and 34 of the FATF Forty Recommendations 
Conclusion 54 states that “With due regard to data protection, the transparency of financial transactions 
and ownership of corporate entities should be improved…” 
Study  of  the  Regulation  and  its  Implementation  in  the  EU  Member  States  that  obstructs  anti-money 
laundering  international  Co-operation  Transcrime  Research  Institute,  Final  Report  October  2001 
available at http://www.transcrime.unitn.it 

18 

 
 
  
 
                                                 
The need for greater transparency to prevent the infiltration of the public and private 
sectors by organised crime was also addressed by the “Millennium Strategy”52. The 
Commission has recently funded a study53 that analyses Member States’ measures to 
prevent penetration of legal entities by organised crime and terrorist groups. A more 
detailed  discussion  of  the  Study’s  findings  can  be  found  in  the  Commission 
Communication on the fight against terrorism and other serious crime.54 

The  Commission  considers  that  improved  transparency  rules  could  help  to 
combat organised financial crime, but that these need to be elaborated in close 
co-operation  with  non-governmental 
representatives.  Greater 
transparency  in  the  corporate  sector  may  impact  on  efficiency  and  economic 
costs,  for  example,  by  requiring  more  detailed  scrutiny  of  the  identity  of 
directors or shareholders. Further to the Commission Staff Working Paper on 
Transparency  of  Legal  Entities,55  the  Commission  proposes  to  carry  out  cost 
benefit analyses in connection with the enhancement of transparency measures 
to help combat organised financial crime. 

sector 

In addition, the Commission acknowledges that improved transparency and exchange 
of information are not only relevant to the fight against organised financial crime but 
can also play a vital role in other areas of EU interest. New ways on preventing and 
combating financial malpractice should be explored, with a particular focus inter alia 
on companies’ use of complex and opaque structures (including certain derivatives) 
of  subsidiaries  and  other  special  purpose  vehicles  to  commit  and  to  conceal 
malpractices  in  the  financial  and  taxation  fields.  One  of  the  objectives  could  be  to 
recommend  a  comprehensive  and  consistent  EU  approach  for  tackling  such 
malpractices. 

3.2. 

Co-operation between the private and public sectors 

Co-operation between the financial and other business sectors and law enforcement 
authorities  at  EU-wide  level  should  play  a  significant  role  in  the  prevention  and 
detection of money laundering and other forms of financial crime. This can facilitate 
the  identification  of  best  practice  within  business,  encourage  cross-fertilisation  of 
ideas  and  promote  the  strengthening  of  sector-wide  internal  controls.  It  is  believed 
that  a  significant  volume  of  organised  financial  crime  goes  unreported.  Promoting 
closer  co-operation  between  police  (or  other  branches  of  law  enforcement)  and  the 
private sector could encourage greater reporting of financial crime.  

In the context of money laundering, greater co-operation between law enforcement, 
government and the financial and other business sectors should encourage detection 

52 

53 

54 

55 

The Prevention and Control of Organised Crime: A European Union Strategy for the Beginning of the 
New Millennium 2000/C 124/01. See in particular Recommendation 3. 
Comparative  Study  into  Member  States’  Measures  to  Prevent  the  Infiltration  of  Legal  Entities  by 
Organised Crime and Terrorist Groups – Institute of Advanced Legal Studies, September 2003 
Commission Communication on measures to be taken to combat terrorism and other forms of serious 
crime, in particular to improve exchanges of information, adopted by the Commission on 29.3.2004 - 
COM(2004)221 
Commission Staff Working Paper on the Transparency of Legal Entities and on Measures to Enhance 
Transparency in the Banking/Financial Sector in the Context of Action to Combat Money Laundering, 
Brussels 16.10.2001 SEC(2001) 1645 

19 

 
 
  
 
                                                 
and  elimination  of  vulnerabilities  within  financial  systems  and  which  organised 
crime seeks to exploit56. 

The  Commission  intends  to  promote  the  development  of  co-operation  between  the 
private and public sectors the EU Forum for the Prevention of Organised Crime and 
by  encouraging  greater  research  work  in  this  area.  Building  on  the  outcome  of  the 
Dublin Conference “Tackling Organised Crime in Partnership”57, the Commission, in 
consultation with other bodies, will develop an Action Plan for such co-operation at 
EU level. 

The  Commission  will  explore  the  scope  for  co-ordination  between  law 
enforcement/government officials and representatives of the financial and other 
business community affected by organised financial crime.  

3.3. 

Financial investigation 

Financial  investigations  provide  one  of  the  tools  to  learn  more  about  activities 
and  patterns  of  behaviour  of  organised  crime  groups  and  provide  effective 
added  value  to  investigations  in  Member  States.  If  the  fight  against  organised 
financial crime is to be taken seriously, there is an overriding need to prioritise 
financial  crime  among  Police  Chiefs’  responsibilities  and  to  make  adequate 
provision  for  the  necessary  resource  and  training  needs  within  police  and 
judicial authorities.  

Financial  investigations  can  play  an  important  role  in  enhancing  organised  crime 
disruption policies. This form of investigative technique should be encouraged both 
at  national  and,  in  appropriate  cases,  at  European  levels.58  Success  in  targeting 
organised crime and its financing requires a shift in traditional concepts of tackling 
crime.  In  financial  crime  investigations,  there  is  a  need  to  take  a  “whole  crime” 
approach  and  to  initiate  simultaneous  investigations  targeting  the  crime  and  other 
activities  linked  to  it.  The  fight  against  organised  financial  crime  would  be 
enhanced through the elaboration of a common policy on the development and 
implementation  of  financial  investigations  as  an  investigative  technique. 
Standard rules for financial investigation bodies throughout the EU should also 
be  considered,  notably  in  connection  with  funding,  training  requirements  and 
co-operation mechanisms of such bodies. 

Member  States  should  enhance  Europol  capacities  in  line  with  developing 
financial  investigation  needs.  Europol  should  be  empowered  to  undertake 
financial investigations in parallel with sectoral organised crime investigations. . 

56 

57 

58 

In July 2003 the US Department of Homeland Security announced a new programme to share with the 
private  sector  data  on  security  gaps  and  financial  system  vulnerabilities  discovered  during 
investigations  to  help  private  companies  improve  defences  against  money  laundering  and  other 
financial crimes. 
The  Dublin  Conference  “Tackling  Organised  Crime  in  Partnership”  took  place  on  20th  and  21st 
November 2003. It was funded by the European Commission’s AGIS programme with the support of 
the Irish Department of Justice, Equality and Law Reform and the Netherlands Centre for International 
Police Co-operation. The conference outcome statement, the “Dublin Declaration” sets out a number of 
recommendations concerning establishment of organised crime prevention partnerships.  
See in particular Recommendation 27 of the FATF Forty Recommendations 

20 

 
 
  
 
                                                 
The  Commission  proposes  to  set  up  a  working  group  of  representatives  of  the 
European  Commission  (including  OLAF),  Europol  and  Eurojust  that  aims  at 
the  elaboration  of  minimum  standards  for  national  criminal  intelligence 
systems,  in  order  to  facilitate  effective  strategic  and  tactical  analysis,  forward 
planning  and  operation,  all  contributing  to  effective  intelligence  led  law 
enforcement in the EU. 

3.4. 

Statistics and benchmarking 

The  fight  against  organised  financial  crime  would  be  enhanced  by  a  common 
language  of  financial  crime.  This  would  also  help  in  working  towards  reliable  and 
comparable statistics indicating trends in this area. Recommendation 32 of the FATF 
40  Recommendations  calls  for  the  establishment  of  comprehensive  statistical 
mechanisms  to  facilitate  effectiveness  and  efficiency  of  anti-money  laundering 
systems. A common system for measuring the volume of STRs, money laundering-
related  prosecutions,  convictions  and  other  law  enforcement  follow-up  to  STRs, 
would be a valuable tool in connection with the setting up of early warning systems 
and evaluating effectiveness of policy in this area. Article 30(2) d) of the Treaty on 
European  Union  stipulates  that  common  action  in  police  co-operation  shall  include 
the  setting  up  of  a  research,  documentation  and  statistical  network  on  cross-border 
crime. Recommendation 1 of the Millennium Strategy foresaw a uniform EU concept 
of  the  topics  and  phenomena  relating  to  organised  crime  and  the  identification  of 
emerging trends59.  

The  Commission,  in  conjunction  with  interested  parties,  intends  to  promote 
relevant  data  collection  and  statistical  mechanisms  with  particular  regard  to 
the 
organised 
implementation  of  a  set  of  economic  risk  assessments  on  sectoral  organised 
crime forms, with a view to formulating a European methodology on economic 
risk and harm assessments. 

financial  crime.  The  Commission 

supporting 

is  also 

3.5. 

Crime proofing 

The Commission services are working on a mechanism to facilitate identification of 
legislative  proposals  which  may  inadvertently  create  opportunities  for  crime.  In  a 
subsequent stage, it may be possible to extend this form of crime risk assessment to 
areas  beyond  the  legislative  process.  This  could  include  procedures  and  processes 
surrounding  such  areas  as  insurance  claim  forms  or  credit  card  applications  with  a 
view  to  reducing  opportunities  for  fraud.  As  regards  fraud  against  the  Community 
budget,  the  Commission/OLAF  has  begun  a  fraud  proofing  initiative  designed  to 
identify  and  remove  opportunities  for  fraud  in  Community  legislative  and  other 
proposals.60  

59 

60 

The Prevention and Control of Organised Crime: A European Union Strategy for the Beginning of the 
New  Millennium  –  OJ  C  124  of  3/5/2000  Recommendation  1  implicitly  addresses  the  need  for  a 
coherent statistical apparatus that would facilitate the scoping of organised crime, measuring European 
trends and assessing the effectiveness of policies adopted and implemented. 
Commission Communication of 7.11.2001 SEC(2001) 2029 final 

21 

 
 
  
 
                                                 
3.6. 

Policy evaluation and monitoring 

The  European  Commission  attaches  particular  importance  to  the  mutual  evaluation 
mechanism as established for instance under the Council’s Multi-Disciplinary Group. 
The  Commission  foresees  a  full  evaluation  of  the  effectiveness  and  impact  of 
policy and measures in the fight against organised financial crime in the EU in 
2005. The purpose of these evaluation missions will be to identify best practice 
and  areas  where  additional  measures  in  the  fight  against  organised  financial 
crime could be taken.  

3.7. 

Training Programmes, Workshops and Studies 

Training  is  a  key  element  in  the  fight  against  organised  financial  crime.  Law 
enforcement and judicial authorities and the relevant private sector must be equipped 
with the necessary skills and know-how. Training must motivate staff and wherever 
possible civil society, by addressing the economic and social imperatives underlying 
the fight against organised financial crime.  

The  European  Commission  will  continue  to  carry  out  and/or  fund  seminars, 
workshops and studies under its AGIS funding programme, details of which can 
be  found  on  the  freedom,  security  and  justice  pages  of  the  europa  web  site 
(www.europa.eu.int).  

4. 

POLICIES  TO  SUPPORT  THE  IMPLEMENTATION  OF  MEASURES  TO 
PREVENT AND FIGHT ORGANISED FINANCIAL CRIME 

4.1. 

Funding measures to fight against organised financial crime 

On 10 February 2004, the Commission published a Communication on the post-2006 
Financial  Perspectives,  entitled  “Building  our  common  future  –  Policy  challenges 
and  Budgetary  means  of  the  Enlarged  Union  2007-2013  (COM  (2004)  101  final). 
The Communication identifies the area of freedom, security and justice as a priority 
within  the  overall  policy  framework,  and  as  “the  new  frontier  for  integration”. 
Among the priorities in the area of security is a stronger focus on crime prevention 
activities, “notably emerging forms and means of serious and organised criminality”. 
This commitment to the establishment of new funding mechanisms will contribute to 
the  broadening  of  the  general  debate  and  policy  development  on  an  effective  fight 
against organised financial crime at EU level. The European Commission will thus 
play a crucial role in the support, monitoring and further development of legislative 
and policy initiatives in this field. 

4.2. 

Enhancing external action in the fight against organised financial crime 

EU  technical  assistance  programmes  aim  to  help  third  countries  to  improve  their 
capacity  to  meet  European  or  international  standards.  There  is  an  increasing  trend 
towards  the  inclusion  of  Justice  and  Home  Affairs  aspects  in  these  programmes, 
particularly in terms of money laundering and terrorism financing. The EU has also 
concluded  a  number  of  agreements  with  third  countries,  most  recently  with  the 
United States on mutual legal assistance in criminal justice concluded on 25th June 

22 

 
 
  
 
2003.61  The  European  Commission  intends  to  explore  the  possibility  of  concluding 
similar  agreements  between  the  European  Union  and  other  countries.  The 
Commission  also  recalls  the  necessity62  to  improve  the  coherence  of  Community 
policies  towards  financial  and  tax  havens,  as  a  mean  to  promote  European  or 
international standards of best practices. 

5. 

CONCLUSION 

Organised  financial  crime  undermines 
legitimate  economic  actors  and 
strengthens the shadow economy thus diminishing economic growth and public 
resources.  The  fight  against  organised  financial  crime  takes  on  even  greater 
significance when it is realised that reducing such crime has a broader impact 
on  the  fight  against  organised  crime  generally.  Money  is  the  lifeblood  of 
organised crime and by reducing or removing access by organised crime groups 
to money; such groups will be significantly weakened. 

The  fight  against  money  laundering  has  been  a  top  political  priority  of  the 
European  Union  for  a  number  of  years,  based  on  the  need  to  protect  the 
financial system and to aid efforts to combat organised crime. The tragic events 
of  11  September  2001  and  the  international  consensus  to  target  terrorist 
financing have given this work even greater visibility and importance.  

Whilst  acknowledging  that  far-reaching  anti-money  laundering  measures  are 
already  in  place,  the  Commission  is  determined  to  continue  the  fight  against 
money  laundering  and  to  develop  legislation  in  the  context  of  an  ever  more 
sophisticated financial system.  

The  first  and  second  Money  Laundering  Directives  have  instituted  significant 
controls  designed  to  facilitate  detection  of  the  laundering  of  money  and  other 
assets deriving from criminal activity. This work will continue. The Commission 
proposal  for  a  third  Money  Laundering  Directive,  to  be  tabled  by  the 
Commission in June 2004, will seek to consolidate and strengthen this approach. 
The  proposal  for  a  third  directive  will  set  out  the  changes  to  the  existing 
Directives  needed  to  take  account  of  the  revised  FATF  40  Recommendations 
and other changes needed to strengthen anti-money laundering defences. 

The fight against organised financial crime must fully engage all stakeholders in 
combined  efforts  to  identify,  monitor  and  combat  crime.  The  development  of 
greater  co-operation  between  private  and  public  sectors  is  a  key  driver  in  this 
area.  Equally,  enhanced  co-operation  and  information  exchange  between  all 
levels  of  law  enforcement  both  domestically  and  internationally  will  play  a 
significant  role  in  this  context.  Greater  focus  is  needed  on  the  strategic  role 
which Europol and Eurojust should play in joint and parallel investigations and 

61 

62 

In  addition  to  mutual  legal  assistance  in  criminal  justice,  the  EU/US  Agreement  also  addresses  areas 
more  specific  to  financial  crime,  notably  exchange  of  bank  account  information  relating  to  legal  or 
physical persons suspected of or charged with a criminal offence.  
See Communication from the Commission to the Council, the European Parliament and the Economic 
and  Social  Committee  on  Tax  policy  in  the  European  Union  -  Priorities  for  the  years  ahead. 
(COM(2001) 260 final of 23 May 2001) 

23 

 
 
  
 
                                                 
on  co-ordination  between  Europol  and  national  law  enforcement  and  judicial 
authorities. 

Financial  investigations  should  become  a  routine  part  of  law  enforcement 
activities, adopting a “whole crime” approach gathering intelligence on criminal 
networks  and  the  beneficiaries  of  organised  crime.  Effective  tools  to  allow 
identification,  freezing  and  confiscation  of  the  assets  and  instrumentalities  of 
organised  criminals,  possibly  with  the  assistance  of  specialised  asset  recovery 
bodies and civil procedures, must be further explored.  

Criminals  benefit  from  the  ability  to  hide  the  identity  of  the  true  beneficial 
owner  of  assets,  from  the  ease  of  incorporation  and  the  use  of  nominees. 
Transparency  therefore  remains  an  important  issue  in  the  fight  against 
organised financial crime and further effort will be needed to address this area.  

Other  forms  of  support  are  also  necessary  to  optimise  the  fight  against 
organised financial crime. There is a need to develop the tools to measure and 
scope  the  extent  of  specific  forms  of  such  crime,  to  monitor  developing  trends 
and  evaluate  effectiveness  of  policy.  Evaluation  of  policy  measures  in  the  fight 
against  organised  financial  crime  is  essential.  The  Commission  will  therefore 
propose  a  full  evaluation  of  the  effectiveness  of  measures  in  this  area  to  help 
identify best practice and areas where additional effort may be needed. 

The European Commission sees the fight against organised financial crime as a 
core priority over the coming years and is determined to play a full role in the 
adoption  of  effective  and  efficient  measures  in  this  field,  as  outlined  in  this 
Communication.  

24