Proposal for a Directive of the European Parliament and of the Council on the prevention of the use of the financial system for the purpose of money laundering, including terrorist financing
Date: 2004-06-30
Institutions: European Commission
Subjects: fight against crime, financial legislation, law of banking, money laundering, provision of services, terrorism

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.6.2004 
COM(2004) 448 final 

2004/0137 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  

on the prevention of the use of the financial system for the purpose of money laundering, 
including terrorist financing 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

Summary 

The  Community  effort  to  combat  money  laundering  is  reflected  in  Directives  of  1991  and 
2001. The 1991 Directive followed closely the recommendations of the Financial Action Task 
Force on Money Laundering (FATF), the world standard in this area. 

The  1991  Directive  defined  money  laundering  in  terms  of  drugs  offences  and  imposed 
obligations  solely  on  the  financial  sector.  The  2001  amendment  extended  the  scope  both  in 
terms of the crimes and the range of professions and activities covered. 

The  2001  Directive  left  open  the  precise  definition  of  serious  offences  and  called  on  the 
Commission to table a further proposal in 2004 on this subject.  

In June 2003  the  FATF revised its Recommendations also now covering terrorist financing. 
The present proposal for a directive also makes specific reference to the combating of terrorist 
financing  and  envisages  the  changes  needed  to  take  account  of  the  revised  FATF  Forty 
Recommendations. 

Introduction 

The  Community  effort  to  prevent  and  combat  money  laundering  (the  efforts  of  criminals  to 
disguise the illicit origin of criminal proceeds) began with Council Directive 91/308/EEC on 
prevention of the use of the financial system for the purpose of money laundering. 

The  1991  Directive  took  particular  account  of  the  Forty  Recommendations  of  the  Financial 
Action Task Force on Money Laundering (FATF), the international body leading the global 
effort in this field. 

The 1991 Directive required Member States to prohibit the laundering of drugs proceeds, to 
oblige their financial sector to identify their customers, keep records, establish internal control 
procedures and to report any indications of money laundering to the competent authorities. 

The limitation to drugs proceeds was soon found to be too restrictive. It was also seen that the 
tightening  of  controls  in  the  financial  sector  had  prompted  money  launderers  to  seek 
alternative laundering methods. 

In  1999,  the  Commission  proposed  widening  the  range  of  criminal  offences  covered  and 
bringing  under  the  Directive  a  wide  range  of  vulnerable  non-financial  activities  and 
professions. 

The  amending  Directive  2001/97/EC  was  adopted  on  4  December  2001.  It  substantially 
followed  the  Commission  proposal  on  the  coverage  of  non-financial  activities  and 
professions.  With  respect  to  the  coverage  of  criminal  activity,  the  co-legislators  decided  to 
cover  the  laundering  of  the  proceeds  of  serious  offences.  A  final  element  in  the  definition 
referred to offences generating “substantial proceeds” or “punishable by a severe sentence of 
imprisonment”.  Article  1(E)  stated  that  “Member  States  shall  before  15  December  2004 
amend the definition provided for in this indent in order to bring this definition into line with 
the definition of serious crime of Joint Action 98/699/JHA” and the Commission was invited 
to bring forward a proposal to this end.  

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Although there was no specific reference to terrorist financing, the Member States agreed that 
the concept of serious offences should cover all offences relating to the financing of terrorism. 
The  new  proposal  makes  specific  reference  to  the  coverage  of  terrorism  and  terrorist 
financing. 

In June 2003 the FATF agreed on a substantial revision of the Forty Recommendations to take 
account  of  experience  acquired  and  the  enhanced  measures  required  to  combat  the 
phenomenon more effectively.  

In  a  number  of  areas,  the  FATF  considerably  extended  the  level  of  detail  in  its 
Recommendations, notably as regards customer identification and verification, the situations 
where a higher risk of money laundering may justify enhanced measures and also situations 
where a reduced risk may justify less rigorous controls. 

The  EU  Member  States  and  the  Commission  believe  that  the  revised  FATF  Forty 
Recommendations should be applied in a coordinated way at EU level.  

For the sake of clarity it has been decided to repeal the existing Directive and propose a new 
autonomous text. The Commission’s starting point is that the new Directive should build on 
the current acquis and that the existing provisions, in particular as regards the treatment of the 
professions, should not be called into question where there is no need to do so. 

The Contact Committee will lose its basis in Community law and a new Committee will need 
to be established. The Commission should be entrusted with limited implementing powers in 
certain  technical  areas  and  to  that  end  should  be  assisted  by  a  new  Committee  on  the 
Prevention of Money Laundering in accordance with the provisions of Decision 1999/468/EC.  

Commentary on the individual articles of the proposal 

Article 1 

Money laundering as defined in the Directive should be a criminal offence. The application of 
criminal law sanctions is essential to ensure effectiveness.  

A  new  definition  of  money  laundering  is  proposed  specifically  to  cover  terrorist  financing. 
The  Directive’s  title  refers  to  the  “use  of  the  financial  system  for  the  purpose  of  money 
laundering,  including  terrorist  financing”.  The  case  of  lawful  property  being  diverted  to 
finance  terrorism  is  now  envisaged  as  part  of  the  definition  of  money  laundering.  All 
subsequent references to money laundering therefore also include terrorist financing. 

Article 2 

The new proposal seeks to complete certain gaps in coverage and to follow the revised FATF 
Forty Recommendations. It makes specific reference to trust and company service providers 
and also includes life insurance intermediaries. 

It is now proposed that all persons trading in goods or providing services and accepting cash 
payments above the threshold should come within the scope of the Directive. 

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Article 3 

This  definitions  article  takes  over  all  of  the  definitions  from  the  earlier  Directive.  It  makes 
technical adjustments to certain definitions, makes more substantial amendments to others and 
also adds certain new definitions. 

The  definition  of  financial  institution  is  amended  in  line  with  the  approach  followed  by  the 
FATF. Any undertaking carrying on the specified lines of financial business is considered to 
be a financial institution but Member States are allowed not to apply the Directive in very low 
risk situations. 

Definitions  are  added  of  insurance  intermediaries,  terrorism,  beneficial  owner,  trust  and 
company service providers, politically exposed persons (PEPs), the financial intelligence unit, 
the business relationship and shell banks. 

The  most  substantial  amendment  relates  to  the  definition  of  criminal  activity.  Terrorism  is 
introduced as a separate element and all serious offences as defined in the relevant third pillar 
instrument  should  be  covered.  This  will  result  in  a  more  coordinated  approach,  though  the 
exact  coverage  in  each  Member  State  will  continue  to  depend  on  the  relevant  national 
criminal code. 

Article 5  

The  1991  Directive  stipulated  that  customers  should  be  identified  when  “entering  into 
business relations” and did not specifically deal with the case of pre-existing situations. The 
new  text,  based  on  the  FATF  Recommendations,  states  clearly  that  credit  and  financial 
institutions must not maintain anonymous accounts. 

Articles 6 and 7 

These  articles  deal  in  detail  with  the  range  of  measures  that  the  institutions  and  persons 
subject to the Directive must take in order to make sure that they know their customers and 
understand the nature of their financial and business activities. These new provisions are not 
radically different in nature to those contained in the earlier Directive. However, in line with 
the revised FATF Recommendations, the new proposal contains more detailed requirements. 
It is specified that those procedures may be conducted on a risk-sensitive basis.  

The  rather  general  requirement  of  the  earlier  Directive  on  beneficial  ownership  is  now  no 
longer  considered  sufficient.  The  persons  and  institutions  subject  to  the  Directive  should 
satisfy  themselves  that  they  have  ascertained  and  understand  any  beneficial  ownership 
situation,  based  on  a  clear  definition  of  the  concept  of  the  beneficial  owner.  Particularly 
complex or opaque situations should prompt additional vigilance. 

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Article 8 

The basic principle is that customer identification and verification should be completed before 
the  business  relationship  is  established  but  it  is  now  also  stipulated  that  the  business 
relationship may begin while the customer identification procedures are still in progress. This 
meets  a  concern  voiced  by  the  professions  in  particular.  At  the  same  time  it  is  now  clearly 
stated  that  if  customer  identification  cannot  finally  be  carried  out  in  a  satisfactory  way  the 
relationship should be terminated. Old accounts and relationships should also be examined at 
an appropriate moment where there might be a money laundering risk. 

Article 9 

This  article  reproduces  the  customer  identification  provisions  for  casinos  from  the  2001 
Directive. 

Article 10 

This  article,  framed  as  a  Member  State  option,  introduces  the  concept  of  simplified  due 
diligence where there is clearly a reduced risk of money laundering and provides examples. 
To ensure  co-ordination, Articles 37 and  38 provide for the Commission, assisted by a new 
Committee,  to  adopt  implementing  measures  involving  the  establishment  of  criteria  for 
determining which situations represent a low risk of money laundering. 

Article 11 

There  are  also  cases  where  the  money  laundering  risk  is  clearly  greater  and  particular  care 
must be exercised. This article specifies three such cases as a minimum, namely cases where 
there  is  no  face-to-face  contact  with  the  customer,  cross-frontier  correspondent  banking 
relationships  and  relations  with  politically-exposed  persons.  Here  too  the  Commission, 
assisted by the new Committee, should be able to adopt implementing measures involving the 
establishment of criteria for determining other situations where there is a need for enhanced 
due diligence. 

Articles 12 to 16 

Unnecessary  duplication  of  customer  identification  procedures  can  be  an  obstacle  to 
legitimate  business  or  professional  activities.  This  concerns,  for  example,  the  case  where  a 
customer is referred or introduced by one bank or lawyer to another bank or lawyer. It should 
often be possible for such customers to be  accepted without any renewed application of the 
customer identification procedures, subject to certain safeguards. 

Article 17 

This article reproduces provisions of the earlier Directive requiring special attention to be paid 
to  complex  or  unusual  transactions.  Useful  guidance  can  be  derived  from  the  work  of  the 
FATF on money laundering trends and techniques. 

Articles 18 to 22 

These  articles  on  the  reporting  of  suspicious  transactions  make  specific  reference  to  the 
financial intelligence unit as the body responsible for receiving and processing such reports. 

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The definition of the financial intelligence unit is taken from the Council Framework Decision 
2000/642/JHA of 17 October 2000.  

The reporting arrangements for the legal and other professions and the relevant safeguards are 
taken over without change from the 2001 Directive. 

Article 23 

It is confirmed that reporting a suspicion of money laundering does not constitute a breach of 
any  obligation  of  confidentiality  under  criminal  or  civil  law.  The  reference  to  reports  being 
made “in good faith” is replaced by a reference to reports being made in accordance with the 
requirements of the Directive. 

Article 24 

This  is  a  new  provision.  The  Commission  is  aware  that  employees  have  been  subjected  to 
threats because it has emerged that they are at the origin of the report to the authorities which 
has  led  to  an  investigation  or  prosecution.  Although  this  Directive  cannot  seek  to  modify 
Member States’ court or prosecution procedures, this article is included, given the importance 
of this issue  for  the  effectiveness  of the Directive,  to  draw  Member  States’  attention  to  this 
serious problem. They should do whatever is in their power to prevent employees from being 
threatened or victimized. 

Article 25 

When a suspicious transaction report is made the client concerned should not be informed of 
this  fact.  The  Member  State  option  to  allow  members  of  the  professions  acting  as  legal 
advisors  to  inform  their  client  that  a  report  is  being  made  has  been  dropped  as  it  is  not  in 
conformity with the revised FATF 40 Recommendations. It is specified, however, that where 
legal advisors seek to dissuade a client from illegal activity this will not constitute a breach of 
the ban on warning the client. 

Articles 26 to 29 

Article  26  confirms  the  existing  obligation  to  keep  records  for  a  minimum  of  five  years. 
Article 27 requires the credit and financial institutions subject to the Directive to apply as far 
as possible the Directive’s obligations regarding customer identification in their branches and 
subsidiaries outside the EU. Article 28 stipulates that EU credit and financial institutions must 
be able to respond fully and rapidly to requests from the financial intelligence unit or other 
competent authorities for information on their business relations with named legal or natural 
persons. Although the Commission is not at this stage proposing a mandatory register of bank 
accounts in all Member States, the new proposal sets out the objective but leaves it to each 
individual  Member  State  to  determine  how  it  should  be  achieved.  The  Commission  will 
monitor  the  impact  of  this  provision.  Lastly,  Article  29  requires  Member  States  to  keep 
appropriate  statistics,  particularly  on  the  use  made  of  and  results  obtained  from  suspicious 
transaction reports. Such information, as well as the feed-back referred to in Article 31, can be 
a  motivating  factor  for  those  subject  to  the  Directive  and  may  help  them  to  develop  more 
effective procedures. 

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Articles 32 and 33 

These articles require that bureaux de change and trust and company service providers must 
be  subject  to  a  licensing  or  registration  obligation  and  that  casinos  must  be  licensed.  The 
Member  States  must  require  their  competent  authorities  to  monitor  compliance  by  all  the 
institutions and persons subject to the Directive.  

Articles 34 to 36 

This addresses the question of sanctions. Some approximation of the approach to penalties for 
money  laundering  and  terrorist  financing  has  already  been  achieved  by  Council  Framework 
Decision  2001/500/JHA  on  money 
laundering  and  Council  Framework  Decision 
2002/475/JHA  on  combating  terrorism.  Article  34  requires  Member  States  to  impose 
appropriate penalties for infringement of the national implementing measures adopted under 
the Directive. Article 35 and 36 deal with corporate liability. 

Articles 37 and 38 

This  Article  37  lays  down  the  areas  where  the  Commission  may  adopt  implementing 
measures under the comitology procedure of Decision 1999/468/EC in order to take account 
of technical developments and to ensure a uniform application of the Directive.  

Article 38 establishes a new Committee on the Prevention of Money Laundering replacing the 
old Contact Committee. The Commission, assisted by this new Committee, should adopt the 
implementing measures referred to under Article 37.  

Articles 39 to 41 

Article  39  reproduces  the  obligation  to  present  periodic  implementation  reports.  Article  40 
repeals  the  earlier  Directive  and  makes  reference  to  an  annexed  correlation  table.  Lastly, 
Article 41 provides for a 12 month implementation period. 

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2004/0137 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  

on the prevention of the use of the financial system for the purpose of money laundering, 
including terrorist financing 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular  Article 
47(2), first and third sentences, and Article 95 thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the European Economic and Social Committee2, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty3, 

Whereas: 

(1) 

(2) 

(3) 

Combating money laundering is one of the most effective means of opposing organised 
crime.  In  addition  to  the  criminal  law  approach,  a  preventive  effort  via  the  financial 
system can also produce results. 

The soundness, integrity and stability of credit and financial institutions and confidence 
in  the  financial  system  as  a  whole  could  be  seriously  jeopardised  by  the  efforts  of 
criminals  and  their  associates  either  to  disguise  the  origin  of  criminal  proceeds  or  to 
channel lawful money for terrorist purposes. In order to avoid Member States’ adopting 
measures  to  protect  their  financial  systems  which  could  be  inconsistent  with  the 
functioning of the internal market, Community action in this area is necessary. . 

In order to facilitate their criminal activities, launderers could try to take advantage of the 
freedom  of  capital  movements  and  freedom  to  supply  financial  services  which  the 
integrated  financial  area  involves,  if  certain  coordinating  measures  are  not  adopted  at 
Community level.  

1 
2 
3 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 

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(4) 

In order to respond to these concerns, Council Directive 91/308/EEC of 10 June 1991 on 
prevention of the use of the financial system for the purpose of money laundering4 was 
adopted.  It  required  Member  States  to  prohibit  money  laundering  and  to  oblige  the 
financial  sector,  comprising  credit  institutions  and  a  wide  range  of  other  financial 
institutions,  to  identify  their  customers,  keep  appropriate  records,  establish  internal 
procedures to train staff and guard against money laundering and to report any indications 
of money laundering to the competent authorities. 

(5)  Money  laundering  is  usually  carried  out  in  an  international  context  so  that  the  criminal 
origin of the funds can be better disguised. Measures adopted solely at national or even 
Community level, without taking account of international coordination and cooperation, 
would  have  very  limited  effects.  The  measures  adopted  by  the  Community  in  this  field 
should  therefore  be  consistent  with  other  action  undertaken  in  other  international  fora. 
The  Community  action  should  continue  to  take  particular  account  of  the  Forty 
Recommendations of the Financial Action Task Force on Money Laundering (hereinafter 
referred  to  as  the  “FATF”),  which  constitutes  the  foremost  international  body  active  in 
the  fight  against  money  laundering  and  terrorist  financing.  Since  the  FATF  Forty 
Recommendations  were  substantially  revised  and  expanded  in  2003,  the  Community 
Directive should be brought into line with this new international standard. 

(6) 

(7) 

(8) 

The General Agreement on Trade in Services (GATS) allows Members to adopt measures 
necessary  to  protect  public  morals,  prevent  fraudand  adopt  measures  for  prudential 
reasons, including for ensuring the stability and integrity of the financial system.  

Although  initially  limited  to  drugs  offences,  there  has  been  a  trend  in  recent  years 
towards  a  much  wider  definition  of  money  laundering  based  on  a  broader  range  of 
predicate  or  underlying  offences.  A  wider  range  of  predicate  offences  facilitates 
suspicious transaction reporting and international cooperation in this area. Therefore, the 
definition of serious crime should be brought into line with the definition of serious crime 
in  Council  Framework  Decision  2001/500/JHA  of  26  June  2001  on  money  laundering, 
the identification, tracing, freezing, seizing and confiscation of instrumentalities and the 
proceeds of crime5. 

Furthermore, the range of criminal activity underlying the definition of money laundering 
should be expanded in order to include the fight against terrorism and terrorist financing. 
Indeed,  the  misuse  of  the  financial  system  to  channel  criminal  or  even  clean  money  to 
terrorist  purposes  poses  a  clear  risk  to  the  integrity,  proper  functioning,  reputation  and 
stability of the financial system. Accordingly, the definition of money laundering should 
be amended to cover not only the manipulation of money derived from crime but also the 
collection  of  legitimate  money  or  property  for  terrorist  purposes.  In  addition,  terrorism 
should form part of the list of serious crimes. 

(8a)  The  general  obligation  to  adopt  effective,  proportionate  and  dissuasive  sanctions, 
combined with the criminalisation obligation of Article 1, means that criminal sanctions 
should  apply  to  natural  persons  who  infringe  obligations  on  customer  identification, 
record-keeping  and  reporting  of  suspicious  transactions  for  the  purpose  of  money 

4 

5 

OJ L 166, 28.6.1991, p. 77. Directive as amended by Directive 2001/97/EC of the European Parliament and 
of the Council (OJ L 344, 28.12.2001, p. 76). 
OJ L 182, 5.7.2001, p. 1. 

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laundering,  since  such  persons  have  to  be  regarded  as  participating  in  the  money 
laundering activity. 

(9) 

Directive  91/308/EEC,  though  imposing  a  customer  identification  obligation,  contained 
relatively little detail on the relevant procedures. In view of the crucial importance of this 
aspect of anti-money laundering prevention, it is appropriate, in accordance with the new 
international standards, to introduce more specific and detailed provisions relating to the 
identification and verification of the customer and of any beneficial owner. To that end a 
precise definition of the “beneficial owner” is essential. 

(10)  The mere prohibition of money laundering is not sufficient and it is necessary to foresee 
criminal  law  sanctions  in  order  to  ensure  that  money  laundering,  including  terrorist 
financing,  is  effectively  prevented.  Therefore,  money  laundering  should  be  made  a 
criminal offence under Community legislation. 

(11)  As  the  tightening  of  controls  in  the  financial  sector  has  prompted  money  launderers  to 
seek  alternative  methods  for  concealing  the  origin  of  the  proceeds  of  crime,  the  anti-
money  laundering  obligations  should  be  extended  to  life  insurance  intermediaries  and 
trust and company service providers. 

(12)  Directive 91/308/EEC, as amended, brought notaries and independent legal professionals 
within the scope of the Community anti-money laundering regime; this coverage should 
be  maintained  unchanged  in  the  new  Directive;  these  legal  professionals,  as  defined  by 
the  Member  States,  are  subject  to  the  provisions  of  the  Directive  when  participating  in 
financial  or  corporate  transactions,  including  providing  tax  advice,  where  there  is  the 
greatest risk of the services of those legal professionals being misused for the purpose of 
laundering the proceeds of criminal activity. 

(13)  Where  independent  members  of  professions  providing  legal  advice  which  are  legally 
recognised and controlled, such as lawyers, are ascertaining the legal position of a client 
or  representing  a  client  in  legal  proceedings,  it  would  not  be  appropriate  under  the 
Directive to put these legal professionals in respect of these activities under an obligation 
to  report  suspicions  of  money  laundering.  There  should  be  exemptions  from  any 
obligation  to  report  information  obtained  either  before,  during  or  after  judicial 
proceedings,  or  in  the  course  of  ascertaining  the  legal  position  for  a  client.  Thus,  legal 
advice  should  remain  subject  to  the  obligation  of  professional  secrecy  unless  the  legal 
counsellor is taking part in money laundering activities, the legal advice is provided for 
money  laundering  purposes,  or  the  lawyer  knows  that  the  client  is  seeking  legal  advice 
for money laundering purposes 

(14)  Directly  comparable  services  need  to  be  treated  in  the  same  manner  when  practised  by 
any of the professionals covered  by  this Directive. In order to ensure the respect of the 
rights  laid  down  in  the  European  Convention  for  the  Protection  of  Human  Rights  and 
Fundamental  Freedoms  and  the  Treaty  on  European  Union,  in  the  case  of  auditors, 
external  accountants  and  tax  advisors  who,  in  some  Member  States,  may  defend  or 
represent  a  client  in  the  context  of  judicial  proceedings  or  ascertain  a  client's  legal 
position,  the  information  they  obtain  in  the  performance  of  these  tasks  should  not  be 
subject to the reporting obligations in accordance with this Directive. 

(15) 

It should be recognised that the risk of money laundering and terrorist financing is not the 
same in every case. In line with a risk-based approach, the principle should be introduced 

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into the Community legislation that simplified customer due diligence could be allowed 
in appropriate cases.  

(16)  Equally, Community legislation should recognise that certain situations present a greater 
risk of money laundering or terrorist financing; although the identity and business profile 
of all customers must be established, there are cases where particularly rigorous customer 
identification and verification procedures are required. 

(17)  Whereas this is particularly true of business relations with individuals holding, or having 
held,  important  public  positions,  particularly  those  coming  from  countries  where 
corruption is widespread; such relations may expose the financial sector in particular to 
significant  reputational  and/or  legal  risks.  Enhanced  attention  to  such  cases  is  also 
justified by the international effort to combat corruption. 

(18)  The  measures  necessary  for  the  implementation  of  this  Directive  should  be  adopted  in 
accordance  with  Council  Decision  1999/468/EC  of  28  June  1999  laying  down  the 
procedures for the exercise of implementing powers conferred on the Commission6.  

(19)  Since  the  measures  necessary  for  the  implementation  of  this  Directive  are  measures  of 
general scope within the meaning of Article 2 of the above Council Decision, they should 
be adopted by use of the regulatory procedure provided for in Article 5 of that Decision. 
To  that  end  a  new  Committee  on  the  Prevention  of  Money  Laundering,  replacing  the 
Money  Laundering  Contact  Committee  set  up  by  Directive  91/308/EEC,  should  be 
established.  

(20) 

In  order  to  avoid  repeated  customer  identification  procedures,  leading  to  delays  and 
inefficiency in international business, it is appropriate, subject to suitable safeguards, to 
allow customers to be introduced whose identification has been carried out elsewhere. 

(21)  Reports  of  suspicious  transactions  should  be  reported  to  the  authorities  responsible  for 
combating money laundering. Such authorities are now generally referred to as financial 
intelligence units and this terminology should also be used in this Directive. All Member 
States should have a financial intelligence unit and it should be made clear that attempted 
money laundering is also to be reported.  

(22)  There have been a number of cases of employees who report their suspicions of money 
laundering  being  subjected  to  threats  or  harassment.  Although  this  Directive  cannot 
interfere  with  Member  States’  judicial  procedures,  this  is  a  crucial  issue  for  the 
effectiveness  of  the  anti-money  laundering  system.  Member  States  should  be  aware  of 
this  problem  and  should  do  whatever  they  can  to  protect  employees  from  such 
harassment. 

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

6 

OJ L 184, 17.7.1999, p. 23. 

EN 

11 

   EN 

 
                                                 
(24) 

(25) 

It is important that credit and financial institutions should  be  able to respond rapidly to 
requests for information from the authorities on whether they maintain business relations 
with named persons. 

In order to maintain the mobilisation of the institutions and others subject to Community 
legislation in this area, feedback should, where practicable, be made available to them on 
the usefulness and follow-up of the reports they present. To make this possible, and to be 
able  to  review  the  effectiveness  of  their  systems  to  combat  money  laundering,  Member 
States should keep and improve the relevant statistics. 

(26)  The importance of the combat against money laundering must lead Member States to lay 
down  effective,  proportionate  and  dissuasive  sanctions  in  national  law  for  failure  to 
respect the national provisions adopted pursuant to this Directive. Since legal persons are 
often  involved  in  complex  money  laundering  operations,  such  sanctions  should  also  be 
adjusted in line with the activity carried on by legal persons. 

(27) 

In  view  of  the  very  substantial  amendments  that  need  to  be  made  to  Directive 
91/308/EEC, it should be replaced for reasons of clarity. 

(28)  Since  the  objectives  of  this  Directive,  cannot  be  sufficiently  achieved  by  the  Member 
States alone and can therefore, by reason of the scale and effects of the action, be better 
achieved at Community level, the Community may adopt measures, in accordance with 
the principle of subsidiarity as set out in Article 5 of the Treaty. In accordance with the 
principle of proportionality, as set out in that Article, this Directive does not go beyond 
what is necessary to achieve those objectives. 

(29)  This Directive respects the fundamental rights and observes the principles recognised in 

particular by the Charter of Fundamental Rights of the European Union, 

HAVE ADOPTED THIS DIRECTIVE: 

Chapter I 

Subject-matter, scope and definitions 

Article 1 

1. Member States shall ensure that money laundering is a criminal offence. 

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

(a) the conversion or transfer of property, knowing that such property is derived from criminal 
activity  or  from  an  act  of  participation  in  such  activity,  for  the  purpose  of  concealing  or 
disguising  the  illicit  origin  of  the  property  or  of  assisting  any  person  who  is  involved  in  the 
commission of such activity to evade the legal consequences of his action;  

EN 

12 

   EN 

 
(b) the concealment or disguise of the true nature, source, location, disposition, movement, rights 
with respect to, or ownership of property, knowing that such property is derived from criminal 
activity or from an act of participation in such activity;  

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

(d) the provision or collection of lawful property, by any means, with the intention that it should 
be used or in the knowledge that it is to be used, in full or in part, for terrorism; 

(e)  participation  in,  association  with  or  conspiracy  to  commit,  attempts  to  commit  and  aiding, 
abetting,  facilitating  and  counselling  the  commission  of  any  of  the  actions  mentioned  in  the 
foregoing indents. 

Knowledge,  intent  or  purpose  required  as  an  element  of  the  activities  referred  to  in  the  first 
subparagraph may be inferred from objective factual circumstances.  

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

1. This Directive shall apply to the following institutions and persons: 

Article 2 

(1) credit institutions;  

(2) financial institutions;  

(3) the following legal or natural persons acting in the exercise of their professional activities: 

(a) auditors, external accountants and tax advisors;  

(b) notaries and other independent legal professionals, when they participate, whether by acting 
on behalf of and for their client in any financial or real estate transaction, or by assisting in the 
planning or execution of transactions for their client concerning the:  

(i) buying and selling of real property or business entities;  

(ii) managing of client money, securities or other assets;  

(iii) opening or management of bank, savings or securities accounts;  

(iv)  organisation of contributions necessary for the creation, operation  or  management 
of companies;  

(v) creation, operation or management of trusts, companies or similar structures;  

(c) trust or company service providers not already covered under points (a) or (b) ; 

(d)  insurance  intermediaries,  when  they  act  in  respect  of  life  insurance  and  other  investment 
related insurance; 

EN 

13 

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(e) real estate agents; 

(f) other persons trading in goods or providing services, whenever payment is made in cash and 
in an amount of EUR 15 000 or more, whether the transaction is carried out in a single operation 
or in several operations which appear to be linked; 

(g) casinos. 

2.  Member  States  may  decide  not  to  apply  this  Directive  in  the  case  of  financial  institutions 
which  engage  in  a  financial  activity  on  an  occasional  or  very  limited  basis  and  where  there  is 
little risk of money laundering occurring. 

Article 3 

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

(1) “credit institution” means a credit institution, as defined in the first subparagraph of Article 
1(1)  of  Directive  2000/12/EC  of  the  European  Parliament  and  of  the  Council7,  including 
branches within the meaning of Article 1(3) of that Directive located in the Community of credit 
institutions having their head offices inside or outside the Community;  

(2) “financial institution” means: 

(a) an undertaking other than a credit institution which carries out one or more of the operations 
included  in  points  2  to  12  and  point  14  of  Annex  I  to  Directive  2000/12/EC,  including  the 
activities  of  currency  exchange  offices  (bureaux  de  change)  and  of  money  transmission  or 
remittance offices;  

(b)  an  insurance  company  duly  authorised  in  accordance  with  Directive  2002/83/EC  of  the 
European  Parliament  and  of  the  Council8,  insofar  as  it  carries  out  activities  covered  by  that 
Directive;  

(c)  an  investment  firm  as  defined  in  Article  4(1)  of  Directive  2004/39/EC  of  the  European 
Parliament and of the Council9;  

(d) a collective investment undertaking marketing its units or shares; 

(e) branches of the institutions referred to in points (a) to (d) when located in the Community of 
financial institutions whose head offices are inside or outside the Community; 

(3)  “insurance  intermediary”  means  an  insurance  intermediary  as  defined  in  Article  2(3)  of 
Directive 2002/92/EC of the European Parliament and of the Council10 ;  

(4)  “terrorism”  means  any  of  the  offences  within  the  meaning  of  Articles  1  to  4  of  Council 
Framework Decision 2002/475/JHA11; 

7 
8 
9 
10 
11 

OJ L 126, 26.5.2000, p. 1. 
OJ L 345, 19.12.2002, p. 1. 
OJ L 145, 30.4.2004, p.1 
OJ L 9, 15.1.2003, p. 3. 
OJ L 164, 22.6.2002, p. 3. 

EN 

14 

   EN 

 
                                                 
(5)  “property”  means  assets  of  every  kind,  whether  corporeal  or  incorporeal,  movable  or 
immovable,  tangible  or  intangible,  and  legal  documents  or  instruments  in  any  form  including 
electronic or digital, evidencing title to or an interest in such assets. 

(6) “criminal activity” means any kind of criminal involvement in the commission of a serious 
crime.  

(7) “serious crimes” means, at least:  

(a) terrorism; 

(b) any of the offences defined in Article 3(1)(a) of the 1988 United Nations Convention against 
Illicit Traffic in Narcotic Drugs and Psychotropic Substances;  

(c) the activities of criminal organisations as defined in Article 1 of Joint Action 98/733/JHA12;  

(d)  fraud,  at  least  serious,  as  defined  in  Article  1(1)  and  Article  2  of  the  Convention  on  the 
protection of the European Communities' financial interests13;  

(e) corruption; 

(f)  all  offences  which  are  punishable  by  deprivation  of  liberty  or  a  detention  order  for  a 
maximum of more than one year or, as regards those States which have a minimum threshold for 
offences  in  their  legal  system,  all  offences  punishable  by  deprivation  of  liberty  or  a  detention 
order for a minimum of more than six months.  

(8) ‘beneficial owner’ means  

(a) the natural person who ultimately, directly or indirectly, owns or controls 10 % or more of the 
shares  or  of  the  voting  rights  of  a  legal  person  or  who  otherwise  exercises  a  comparable 
influence over the management of a legal person, other than a company listed on an official stock 
exchange  that  is  subject  to  disclosure  requirements  consistent  with  Community  legislation  or 
subject to equivalent international standards;  

(b) the natural person who is ultimate beneficiary, directly or indirectly, of 10 % or more of the 
property of a foundation, a trust or similar legal arrangement or who exercises influence over a 
comparable quantity of the property of a foundation, a trust or a similar legal arrangement, other 
than  a  company  listed  on  an  official  stock  exchange  that  is  subject  to  disclosure  requirements 
consistent with Community legislation or subject to equivalent international standards;  

(c) the natural persons on whose behalf a transaction or activity is being conducted; 

(9)  “trust  and  company  service  providers”  means  any  natural  or  legal  person  which  by  way  of 
business provides any of the following services to third parties: 

(a) forming companies or other legal persons;  

(b)  acting  as  or  arranging  for  another  person  to  act  as  a  director  or  secretary  of  a  company,  a 
partner of a partnership, or a similar position in relation to other legal persons;  

12 
13 

OJ L 351, 29.12.1998, p. 1. 
OJ C 316, 27.11.1995, p. 48. 

EN 

15 

   EN 

 
                                                 
(c)  providing  a  registered  office;  business  address  or  accommodation,  correspondence  or 
administrative address for a company, a partnership or any other legal person or arrangement; 

(d) acting as or arranging for another person to act as a trustee of an express trust or a similar 
legal arrangement; 

(e) acting as or arranging for another person to act as a nominee shareholder for another person; 

(10)  “politically  exposed  persons”  means  natural  persons  who  are  or  have  been  entrusted  with 
prominent public functions and whose substantial or complex financial or business transactions 
may represent an enhanced money laundering risk and close family members or close associates 
of such persons ; 

(11) “Business relationship” means a business, professional or commercial relationship which is 
expected, at the time when the contact is established, to have an element of duration; 

(12)  “Shell  bank”  means  a  credit  institution  incorporated  in  a  jurisdiction  in  which  it  has  no 
physical presence, involving meaningful mind and management, and which is unaffiliated with a 
regulated financial group. 

The Member States may adopt or retain in force stricter provisions in the field covered by this 
Directive to prevent money laundering. 

Article 4 

Chapter II 

Customer due diligence 

SECTION 1 

GENERAL PROVISIONS 

Article 5 

Member  States  shall  prohibit  their  credit  and  financial  institutions  from  keeping  anonymous 
accounts, anonymous passbooks or accounts in fictitious names. 

Article 6 

The  institutions  and  persons  covered  by  this  Directive  shall  apply  customer  due  diligence 
procedures  on  the  basis  of  reliable  independent  source  documents,  data  or  information  in  the 
following cases: 

(a) 

when establishing a business relationship; 

EN 

16 

   EN 

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

when there is a suspicion of money laundering, regardless of any derogation, exemption 

(c) 
or threshold; 

when  there  are  doubts  about  the  veracity  or  adequacy  of  previously  obtained  customer 

(d) 
identification data. 

Article 7 

1. Customer due diligence procedures shall comprise the following activities: 

(a) 

identifying the customer and verifying the customer’s identity; 

(b) 
identifying,  where  applicable,  the  beneficial  owner  and  taking  reasonable  measures  to 
verify  the  identity  of  the  beneficial  owner  such  that  the  institution  or  person  is  satisfied  that  it 
knows who the beneficial owner is, including, as regards legal persons, trusts and similar legal 
arrangements, taking reasonable measures to understand the ownership and control structure of 
the customer; 

(c) 

obtaining information on the purpose and intended nature of the business relationship; 

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

2.  The  institutions  and  persons  covered  by  this  Directive  shall  apply  each  of  the  customer  due 
diligence requirements in paragraph 1, but may determine the extent of such measures on a risk-
sensitive basis depending on the type of customer, business relationship, product or transaction.  

3. With regard to the service of money transmission referred to in point 4 of Annex I to Directive 
2000/12/EC,  the  special  provisions  on  customer  identification  set  out  in  Regulation  …..of  the 
European  Parliament  and  of  the  Council  on  payer’s  information  accompanying  credit  transfers 
and transfers executed by money remitters shall apply. 

Article 8 

1. Member States shall require that the institutions and persons covered by this Directive apply 
customer  due  diligence  before  or  during  the  course  of  establishing  a  business  relationship  or 
executing a transaction for occasional customers. 

2.  Member  States  shall  require  that,  where  the  institution  or  person  concerned  is  unable  to 
comply  with  points  (a),  (b)  and  (c)  of  Article  7(1),  it  may  not  open  the  account,  establish  a 
business relationship or perform the transaction, or shall terminate the business relationship, and 
shall consider making a report to the financial intelligence unit in accordance with Article 19 in 
relation to the customer. 

EN 

17 

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3. Member States shall require that institutions and persons covered by this Directive apply the 
customer due diligence procedures not only to all new customers but also at appropriate times to 
existing customers on a risk-sensitive basis. 

Article 9 

1.  Member  States  shall  require  that  all  casino  customers  shall  be  identified  and  the  identity 
verified if they purchase or exchange gambling chips with a value of EUR 1000 or more. 

2.  Casinos  subject  to  State  supervision  shall  be  deemed  in  any  event  to  have  satisfied  the 
customer  due  diligence  obligation  if  they  register,  identify  and  verify  the  identity  of  their 
customers  immediately  on  or  before  entry,  regardless  of  the  amount  of  gambling  chips 
purchased. 

SECTION 2 

SIMPLIFIED CUSTOMER DUE DILIGENCE 

Article 10 

1. By way of derogation from Articles 6, 7 and 8(2) Member States may allow the institutions 
and  persons  covered  by  this  Directive  not  to  apply  customer  due  diligence  in  respect  of 
customers who represent a low risk of money laundering, such as: 

(a) credit and financial institutions from the Member States, or from third countries provided that 
they  are  subject  to  requirements  to  combat  money  laundering  consistent  with  international 
standards and are supervised for compliance with those requirements; 

(b)  listed  companies  whose  securities  are  admitted  to  trading  on  a  regulated  market  within  the 
meaning  of  Directive  2004/39/EEC  in  one  or  more  Member  States  and  listed  companies  from 
third  countries  which  are  subject  to  disclosure  requirements  consistent  with  Community 
legislation; 

(c)  beneficial  owners  of  pooled  accounts  held  by  notaries  and  other  independent  legal 
professionals from the Member States, or from third countries provided that they are subject to 
requirements  to  combat  money  laundering  consistent  with  international  standards  and  are 
supervised for compliance with those requirements. 

2. The Member States and the Commission shall inform each other of cases where they consider 
that a third country does not meet the conditions laid down in paragraph 1(a), (b) or (c). 

3. By way of derogation from Articles 6, 7 and 8(2), Member States may allow the institutions 
and persons covered by this Directive not to apply customer due diligence in respect of products 
and transactions which represent a low risk of money laundering, such as: 

(a)  life  insurance  policies  where  the  annual  premium  is  no  more  than  EUR  1000  or  the  single 
premium is no more than EUR 2500; 

EN 

18 

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(b) insurance policies for pension schemes if there is no surrender clause and the policy cannot 
be used as collateral; 

(c) a pension, superannuation or similar scheme that provides retirement benefits to employees, 
where  contributions  are  made  by  way  of  deduction  from  wages  and  the  scheme  rules  do  not 
permit the assignment of a member’s interest under the scheme; 

(d)  electronic  money,  as  defined  in  Article  1  of  Directive  2000/46/EC14,  where  low  limits  are 
imposed on the amount issued, the amount that can be stored on an electronic device or the size 
of the permitted transactions. 

Article 10a 

Where the Commission adopts a decision pursuant to the first subparagraph of Article 37(3), the 
Member  States  shall  prohibit  the  institutions  and  persons  covered  by  this  Directive  from 
applying simplified due diligence to credit and financial institutions or listed companies from the 
third country concerned. 

SECTION 3 

ENHANCED CUSTOMER DUE DILIGENCE 

Article 11 

1. Member States shall require the institutions and persons covered by this Directive to apply, on 
a  risk-sensitive  basis,  enhanced  customer  due  diligence  measures,    in  addition  to  the  measures 
referred to in Articles 6, 7 and 8(2), in situations which by their nature can present a higher risk 
of money laundering, and at least in the following situations in accordance with the second, third 
and fourth subparagraphs of this paragraph. 

Where the customer has not been physically present for identification purposes, Member States 
shall require those institutions and persons to apply one or more of the following measures: 

measures  such  as  ensuring  that  the  customer’s  identity  is  established  by  additional 

(a) 
documentary evidence;  

supplementary  measures  to  verify  or  certify  the  documents  supplied,  or  requiring 

(b) 
confirmatory certification by an institution covered by this Directive;  

that the first payment of the operations is carried out through an account opened in the 

(c) 
customer’s name with a credit institution. 

In  respect  of  cross-frontier  correspondent  banking  relationships  with  credit  institutions  from 
other Member States or third countries, Member States shall require their credit institutions to:  

14 

OJ L 275, 27.10.2000, p. 39. 

EN 

19 

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

(b) assess the respondent institution’s anti-money laundering controls;  

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

(d) document the respective responsibilities of each institution;  

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

In  respect  of  relations  with  politically  exposed  persons,  Member  States  shall  require  those 
institutions and persons to:  

(a) have appropriate risk management systems to determine whether the customer is a politically 
exposed person;  

(b)  have  senior  management  approval  for  establishing  business  relationships  with  such 
customers;  

(c) take reasonable measures to establish the source of wealth and source of funds or by requiring 
to conduct ongoing monitoring of the business relationship.  

2.  Member  States  shall  prohibit  credit  institutions  from  entering  into  or  continuing  a 
correspondent  banking  relationship  with  a  shell  bank  or  a  respondent  bank  which  permits  its 
accounts to be used by shell banks. 

EN 

20 

   EN 

 
3.  Member  States  shall  ensure  that  the  institutions  and  persons  covered  by  this  Directive  pay 
special attention to any money laundering threat that may arise from products or transactions that 
might favour anonymity, and take measures, if needed, to prevent their use in money laundering 
schemes. 

SECTION 4 

PERFORMANCE BY THIRD PARTIES  

Article 12 

Member States may permit the institutions and persons covered by this Directive to rely on third 
parties to perform the requirements laid down in Article 7(1) (a), (b) and (c).  

However, the ultimate responsibility shall remain with the institution or person covered by this 
Directive which relies on the third party. 

Article 13 

1. For the purposes of this Section, “third parties” shall mean institutions and persons who are 
equivalent to those listed in Article 2, and who satisfy the following requirements:  

(a) 

they are subject to mandatory professional registration;  

(b) 
they apply customer due diligence measures and record keeping measures equivalent to 
those laid down in this Directive and their compliance with the requirements of this Directive is 
supervised  in  accordance  with  Section  2  of  Chapter  V,  or  they  are  situated  in  a  third  country 
which imposes equivalent requirements to those laid down in this Directive. 

2. The Member States and the Commission shall inform each other of cases where they consider 
that a third country does not meet the conditions laid down in paragraph 1(b). 

Article 13a 

Where the Commission adopts a decision pursuant to the first subparagraph of Article 37(3), the 
Member  States  shall  prohibit  the  institutions  and  persons  covered  by  this  Directive  from 
allowing  third  parties  from  the  third  country  concerned  to  perform  customer  due  diligence  on 
their behalf. 

Third parties shall make information based on the requirements laid down in Article 7(1) (a), (b) 
and (c) immediately available to the institution or person to which the customer is being referred.  

Article 14 

EN 

21 

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Relevant copies of identification and verification data and other relevant documentation on the 
identity  of  the  customer  or  the  beneficial  owner  shall  immediately  be  forwarded  by  the  third 
party to the institution or person to which the customer is being referred on request. 

Article 15 

Each Member State shall in any case permit its institutions and persons referred to in Article 2 
(1),  (2)  and  (3)  points  (a)  to  (d)  to  recognise  and  accept  the  outcome  of  the  customer  due 
diligence  procedures  laid  down  in  Article  7(1)(a)  to  (c),  carried  out  in  accordance  with  this 
Directive by an institution or person referred to in Article 2 (1), (2) and (3) points (a) to (d) in 
another Member State and meeting the requirements laid down in Articles 12, 13 and 14, even if 
the  documents  or  data  on  which  these  requirements  have  been  based  are  different  to  those 
required in the Member State to which the customer is being referred. 

Article 16 

This  Section  shall  not  apply  to  outsourcing  or  agency  relationships  where  on  the  basis  of  a 
contractual  arrangement  the  outsourcing  service  provider  or  agent  is  to  be  regarded  as 
synonymous with the institution or person covered by this Directive. 

Chapter III 

Reporting obligations 

SECTION 1 

GENERAL PROVISIONS 

Article 17 

Member States shall require that the institutions and persons covered by this Directive examine 
with  special  attention  any  activity  which  they  regard  as  particularly  likely,  by  its  nature,  to  be 
related  to  money  laundering  and  in  particular  complex  or  unusual  large  transactions  and  all 
unusual patterns of transactions which have no apparent economic or lawful purpose.  

Each  Member  State  shall  establish  a  financial  intelligence  unit  in  order  effectively  to  combat 
money laundering. 

Article 18  

EN 

22 

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That  financial  intelligence  unit  shall  be  established  as  a  central  national  unit,  with  adequate 
resources.  It  shall  be  responsible  for  receiving,  and,  to  the  extent  permitted,  for  requesting, 
analysing  and  disseminating  to  the  competent  authorities,  disclosures  of  financial  information 
which  concern  suspected  proceeds  of  crime  or  which  are  required  by  national  legislation  or 
regulation. 

Article 19 

1. Member States shall require the institutions and persons covered by this Directive, and where 
applicable their directors and employees, to cooperate fully: 

(a)  by  directly  and  promptly  informing  the  financial  intelligence  unit,  on  their  own  initiative, 
where  the  institution  or  person  covered  by  this  Directive  knows,  suspects  or  has  reasonable 
grounds to suspect that money laundering is being committed or attempted. 

(b) by promptly furnishing the financial intelligence unit, at its request, with all necessary further 
information, in accordance with the procedures established by the applicable legislation. 

2. The information referred to in paragraph 1 shall be forwarded to the financial intelligence unit 
of  the  Member  State  in  whose  territory  the  institution  or  person  forwarding  the  information  is 
situated.  The  person  or  persons  designated  in  accordance  with  the  procedures  provided  for  in 
Article 30 shall normally forward the information. 

Article 20 

1.  In  the  case  of  the  notaries  and  other  independent  legal  professionals  referred  to  in  Article 
2(3)(b),  Member  States  may  designate  an  appropriate  self-regulatory  body  of  the  profession 
concerned  as  the  authority  to  be  informed  in  the  first  instance  in  place  of  the  financial 
intelligence unit. In such case they shall lay down the appropriate forms of co-operation between 
that body and the financial intelligence unit. 

2.  Member  States  shall  not  be  obliged  to  apply  the  obligations  laid  down  in  Article  19(1)  to 
notaries,  independent  legal  professionals,  auditors,  external  accountants  and  tax  advisors  with 
regard  to  information  they  receive  from  or  obtain  on  one  of  their  clients,  in  the  course  of 
ascertaining  the  legal  position  for  their  client  or  performing  their  task  of  defending  or 
representing that client in, or concerning judicial proceedings, including advice on instituting or 
avoiding  proceedings,  whether  such  information  is  received  or  obtained  before,  during  or  after 
such proceedings. 

Article 21  

Member States shall require the institutions and persons covered by this Directive to refrain from 
carrying  out  transactions  which  they  know  or  suspect  to  be  related  to  money  laundering  until 
they have informed the financial intelligence unit.  

The  financial  intelligence  unit  may,  under  conditions  to  be  determined  by  the  national 
legislation, give instructions not to execute the operation.  

EN 

23 

   EN 

 
Where such a transaction is suspected of giving rise to money laundering and where to refrain in 
such  manner  is  impossible  or  is  likely  to  frustrate  efforts  to  pursue  the  beneficiaries  of  a 
suspected money laundering operation, the institutions and persons concerned shall apprise the 
financial intelligence unit immediately afterwards. 

Article 22 

1. Member States shall ensure that if, in the course of inspections carried out in the institutions 
and persons covered by this Directive by the competent authorities, or in any other way, those 
authorities discover facts that could constitute evidence of money laundering, they shall directly 
and promptly inform the financial intelligence unit. 

2.  Member  States  shall  ensure  that  supervisory  bodies  empowered  by  law  or  regulation  to 
oversee  the  stock,  foreign  exchange  and  financial  derivatives  markets  inform  the  financial 
intelligence unit if they discover facts that could constitute evidence of money laundering. 

Article 23 

The disclosure in accordance with the requirements of this Directive to the financial intelligence 
unit by an institution or person covered by this Directive or by an employee or director of such 
an  institution  or  person  of  the  information  referred  to  in  Articles  19,  20  and  21  shall  not 
constitute a breach of any restriction on disclosure of information imposed by contract or by any 
legislative, regulatory or administrative provision, and shall not involve the institution or person 
or its directors or employees in liability of any kind. 

Article 24 

Member  States  shall  take  all  appropriate  measures  in  order  to  protect  employees  of  the 
institutions  or  persons  covered  by  this  Directive  who  report  suspicions  of  money  laundering 
either  internally  or  to  the  financial  intelligence  unit  from  being  exposed  to  threats  or  hostile 
action. 

SECTION 2 

PROHIBITION OF DISCLOSURE 

Article 25  

The institutions and persons covered by this Directive and their directors and employees shall not 
disclose  to  the  customer  concerned  nor  to  other  third  persons  that  information  has  been 
transmitted to the financial intelligence unit in accordance with Articles 19, 20 and 21 or that a 
money laundering investigation is being or may be carried out. 

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Where independent legal professionals, notaries, auditors, accountants and tax advisors, acting as 
independent  legal  professionals  seek  to  dissuade  a client  from  engaging  in  illegal  activity,  this 
shall not constitute a disclosure within the meaning of the first paragraph. 

Chapter IV 

Record keeping and statistical data 

Article 26 

Member  States  shall  require  the  institutions  and  persons  covered  by  this  Directive  to  keep  the 
following  documents  and  information  for  use  as  evidence  in  any  investigation  into  money 
laundering: 

in the case of the customer due diligence process, a copy or the references of the evidence 

(a) 
required, for a period of at least five years after the relationship with their customer has ended; 

(b) 
in  the  case  of  business  relationships  and  transactions,  the  supporting  evidence  and 
records, consisting of the original documents or copies admissible in court proceedings under the 
applicable  national  legislation  for  a  period  of  at  least  five  years  following  execution  of  the 
transactions or the termination of the business relationship; 

(c) 
in  the  case  of  cash  payments  for  an  amount  of  EUR  15  000  or  more,  the  supporting 
evidence and records of these receipts for a period of at least five years following the execution 
of the cash payments. 

Article 27 

1.  Member  States  shall  require  the  institutions  covered  by  this  Directive  to  apply  in  their 
branches and majority owned subsidiaries located in third countries measures at least equivalent 
to those set out in this Directive with regard to customer due diligence and record keeping.  

Where  the  legislation  of  the  third  country  does  not  ensure  application  of  such  equivalent 
measures,  the  Member  States  shall  require  the  institutions  concerned  to  inform  the  competent 
authorities of the relevant home State accordingly. 

2. The Member States and the Commission shall inform each other of cases where the legislation 
of  the  third  country  does  not  ensure  application  of  the  measures  required  under  the  first 
subparagraph of paragraph 1. 

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Article 28 

Member  States  shall  take  the  necessary  measures  to  ensure  that  their  credit  and  financial 
institutions are able to respond fully and rapidly to enquiries from the financial intelligence unit, 
or from other authorities  in accordance  with their national law, as to whether they maintain or 
have maintained during the previous five years a business relationship with specified natural or 
legal persons and on the nature of the business relationship. 

Article 29 

Member  States  shall  ensure  that  they  are  able  to  review  the  effectiveness  of  their  systems  to 
combat  money  laundering  by  maintaining  comprehensive  statistics  on  matters  relevant  to  the 
effectiveness of such systems.  

Such statistics shall at a minimum cover the number of suspicious transaction reports made to the 
financial intelligence unit, the follow-up given to these reports and indicate on an annual basis 
the number of cases investigated, the number of persons prosecuted and the number of persons 
convicted for money laundering offences. 

Chapter V 

Enforcement measures 

SECTION 1 

INTERNAL PROCEDURES, TRAINING AND FEEDBACK 

Article 30 

Member States shall require that the institutions and persons covered by this Directive establish 
adequate policies and procedures of customer due diligence, reporting, record keeping, internal 
control, risk assessment, risk management and communication in order to forestall and prevent 
operations related to money laundering. 

Article 31 

1.  Member  States  shall  require  that  the  institutions  and  persons  covered  by  this  Directive  take 
appropriate  measures  so  that  their  employees  are  aware  of  the  provisions  contained  in  this 
Directive.  

These  measures  shall  include  participation  of  their  relevant  employees  in  special  ongoing 
training  programmes  to  help  them  recognise  operations  which  may  be  related  to  money 
laundering as well as to instruct them as to how to proceed in such cases. 

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Where a natural person falling within any of the categories listed in Article 2(3) undertakes his 
professional  activities  as  an  employee  of  a  legal  person,  the  obligations  in  this  Section  shall 
apply to that legal person rather than to the natural person. 

2.  Member  States  shall  ensure  that  the  institutions  and  persons  covered  by  this  Directive  have 
access to up-to-date information on the practices of money launderers and on indications leading 
to the recognition of suspicious transactions. 

3. Member States shall ensure that, wherever practicable, timely feedback on the effectiveness of 
and follow-up to reports of suspected money laundering is provided. 

SECTION 2 

SUPERVISION 

Article 32 

1.  Member  States  shall  provide  that  currency  exchange  offices,  trust  and  company  service 
providers must be licensed or registered and casinos be licensed in order to operate their business 
legally. 

2.  Member  States  shall  require  competent  authorities  to  refuse  licensing  or  registration  of  the 
entities referred to in paragraph 1 if they are not satisfied that the persons who effectively direct 
or  will  direct  the  business  of  such  entities  or  the  beneficial  owners  of  such  entities  are  fit  and 
proper persons. 

Article 33 

1. Member States shall require the competent authorities to effectively monitor compliance with 
the requirements of this Directive by all the institutions and persons covered by this Directive. 

2. Member States shall ensure that the competent authorities have adequate powers, including the 
possibility to obtain information, and have adequate resources to perform their functions. 

SECTION 3 

PENALTIES 

Article 34 

The  penalties  applicable  to  infringements  of  the  national  provisions  adopted  pursuant  to  this 
Directive must be effective, proportionate and dissuasive. 

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Article 35 

1.  Member  States  shall  ensure  that  legal  persons  can  be  held  liable  for  infringements  of  the 
obligations  on  record  keeping,  customer  identification  and  reporting  suspicious  transaction 
referred  to  in  this  Directive  and  which  are  committed  for  their  benefit  by  any  person,  acting 
either individually or as part of an organ of the legal person, who has a leading position within 
the legal person, based on: 

a) a power of representation of the legal person, 

b) an authority to take decisions on behalf of the legal person,  

c) an authority to exercise control within the legal person. 

2.  Apart  from  the  cases  already  provided  for  in  paragraph  1,  Member  States  shall  ensure  that 
legal persons can be held liable where the lack of supervision or control by a person referred to 
in paragraph 1 has made possible the commission of the infringements referred to in paragraph 1 
for the benefit of the legal person by a person under its authority. 

Article 36 

Member States shall ensure that a legal person held liable for infringements of the obligations on 
record  keeping,  customer  identification  and  reporting  suspicious  transaction  referred  to  in  this 
Directive  is  punishable  by  effective,  proportionate  and  dissuasive  sanctions,  which  shall,  inter 
alia, include: 

a) fines 

b) a ban on access to public assistance or subsidies;  

c) temporary or permanent ban on engaging in commercial activities; 

d) placing under judicial supervision; 

e) a judicial winding-up. 

Chapter VI 

Implementing and amending measures 

Article 37  

1. In order to take account of technical developments in the fight against money laundering and 
to  ensure  uniform  application  of  this  Directive,  the  Commission  shall,  in  accordance  with  the 
procedure referred to in Article 38(2), adopt the following implementing measures: 

clarification  of  the  technical  aspects  of  the  definitions  in  Article  1(2)  and  in  Article 

(a) 
3(2)(a) and (d), (5), (8), (9), (10), (11) and (12); 

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establishment of detailed rules for identifying the situations which represent a low risk of 

(b) 
money laundering as referred to in Article 10(1), (2) and (3); 

establishment  of  detailed  rules  for  identifying  situations  which  represent  a  high  risk  of 

(c) 
money laundering as referred to in Article 11; 

(d) 
establishment  of  detailed  rules  for  identifying  situations  where,  in  accordance  with 
Article  2(2),  it  is  justified  not  to  apply  this  Directive  to  certain  undertakings  carrying  out  a 
financial activity on an occasional or very limited basis. 

2. The Commission shall, in accordance with the procedure referred to in Article 38(2), adapt the 
amounts referred to in Articles 2(f), 6(b), 9(1) and 10(2)(a) in order to take account of inflation. 

3. The Commission shall, in accordance with the procedure referred to in Article 38(2), adopt a 
decision finding that a third country does not meet the conditions laid down in Article 10(1)(a), 
(b)  or  (c)  or  in  Article  13(b),  or  that  the  legislation  of  that  third  country  does  not  ensure 
application of the measures required under the first subparagraph of Article 27(1). 

Article 38 

1. The Commission shall be assisted by a Committee on the Prevention of Money Laundering, 
hereinafter “the Committee”. 

2.  Where  reference  is  made  to  this  paragraph,  Articles  5  and  7  of  Decision  1999/468/EC  shall 
apply, having regard to the provisions of Article 8 thereof.  

The period laid down in Article 5(6) of Decision 1999/468/EC shall be set at three months. 

3. The Committee shall adopt its rules of procedure. 

Chapter VII 

Final provisions 

Article 39 

Within three years of the entry into force of this Directive, and at least at three yearly intervals 
thereafter,  the  Commission  shall  draw  up  a  report  on  the  implementation  of  this  Directive  and 
submit it to the European Parliament and the Council.  

Directive 91/308/EEC is repealed. 

Article 40 

References to the repealed Directive shall be construed as references to this Directive and read in 
accordance with the correlation table in the Annex. 

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Article 41 

1. 

Member States shall bring into force the laws, regulations and administrative provisions 
necessary to comply with this Directive by [insert date 12 months following entry into 
force  of  the  Directive]  at  the  latest.  They  shall  forthwith  communicate  to  the 
Commission  the  text  of  those  provisions  and  a  correlation  table  between  those 
provisions and this Directive. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

2. 

Member States shall communicate to the Commission the text of the main provisions of 
national law which they adopt in the field covered by this Directive. 

This  Directive  shall  enter  into  force  on  the  twentieth  day  after  its  publication  in  the  Official 
Journal of the European Union. 

Article 42 

Article 43 

This Directive is addressed to the Member States.  

Done at Brussels, […] 

For the European Parliament 
The President 

For the Council 
The President   

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ANNEX  

CORRELATION TABLE 

This Directive 

Article 1(1) 

Article 1(2)(a) to (c) and (e) 

Article 1(2)(d) 

Article 2(1) 

Article 2(2) 

Directive 91/308/EEC 

Article 2 

Article 1(C) 

Article 2a(1) 

Article 2a(2) 

Article 2(3)(a), (b) and (e) to (g) 

Article 2a(3) to (7) 

Article 2(3)(c ) and (d) 

Article 3(1)(1) 

Article 3(1)(2)(a) 

Article 3(1)(2)(b) 

Article 3(1)(2)(c) 

Article 3(1)(2)(d) 

Article 3(1)(2)(e) 

Article 3(1)(3) 

Article 3(1)(4) 

Article 3(1)(5) 

Article 3(1)(6) 

Article 3(1)(7),  

Article 3(1)(7)(a) 

Article 3(1)(7)(b) 

Article 3(1)(7)(c) 

Article 3(1)(7)(d) 

Article 3(1)(7)(e) 

 Article 1(A) 

Article 1(B)(1) 

Article 1(B)(2) 

Article 1(B)(3) 

Article 1(B)(4) 

Article 1(B), paragraph 2 

- 

- 

Article 1(D) 

Article 1(E), 1st subparagraph  

Article 1(E), 2nd subparagraph  

- 

Article 1(E), 1st indent 

Article 1(E), 2nd indent 

Article 1(E), 3rd indent 

Article 1(E), 4th indent 

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Article 3(1)(7)(f) 

Article 3(1)(8) 

Article 3(1)(9) 

Article 3(1)(10) 

Article 3(1)(11) 

Article 3(1)(12) 

Article 4 

Article 5 

Article 6(a) 

Article 6(b) 

Article 6(c) 

Article 6(d) 

Article 7(1)(a) 

Article 7(1)(b) to (d) 

Article 7(2) 

Article 7(3) 

Article 8(1) 

Article 8(2) and (3) 

Article 9 

Article 10(1)(a) 

Article 10(1)(b) and (c) 

Article 10(2)(a) 

Article 10(2)(b) 

Article 10(2)(c) 

Article 10(2)(d) 

Article 10a 

Article 1(E), 5th indent, and 3rd subparagraph 

- 

- 

- 

- 

Article 15 

_ 

Article 3(1)  

Article 3(2) 

Article 3(8) 

Article 3(7) 

Article 3(1)  

- 

- 

- 

Article 3(1) 

Article 3(5) and (6) 

Article 3(9) 

Article 3(3) 

Article 3(4) 

Article 3(4) 

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Article 11(1) 1st and second paragraph 

Article 3(11) 

Article 11(1) 3rd and 4th paragraph 

Article 11(2) and (3) 

Article 12 

Article 13 

Article 13a 

Article 14 

Article 15 

Article 16 

Article 17 

Article 18 

Article 19 

Article 20 

Article 21 

Article 22 

Article 23 

Article 24 

Article 25, 1st paragraph 

Article 25, 2nd paragraph 

Article 26(a) 

Article 26(b) 

Article 26(c) 

Article 27 

Article 28 

Article 29 

Article 30 

- 

- 

- 

- 

- 

- 

- 

Article 5 

Article 6(1) and (2) 

Article 6(3) 

Article 7 

Article 10 

Article 9 

- 

Article 8(1) 

Article 4, 1st indent 

Article 4, 2nd indent 

- 

- 

- 

- 

Article 11(1) (a) 

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Article 31(1), 1st subparagraph 

Article 31(1), 2nd subparagraph 

Article 31(1), 3rd subparagraph 

Article 31(2) 

Article 32 

Article 33 

Article 34(1) 

Article 34(2) 

Article 35 

Article 36 

Article 37 

Article 38 

Article 39 

Article 40 

Article 41 

Article 11(1)(b), first sentence 

Article 11(1)(b) second sentence 

Article 11(1), second subparagraph 

Article 11(2) 

Article 14 

Article 17 

Article 16 

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