COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Towards better implementation of the EU’s anti-money laundering and countering the financing of terrorism framework
Date: 2019-07-24
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: common foreign and security policy, credit institution, fight against crime, financial supervision, money laundering, single market, terrorism financing

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 24.7.2019  COM(2019) 360 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Towards better implementation of the EU’s anti-money laundering and countering the financing of terrorism framework     
 
 
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 

Towards better implementation of the EU’s anti-money laundering and countering 
the financing of terrorism framework  

I. 

INTRODUCTION 

Risks of money laundering and the financing of terrorism remain a major concern for the 
integrity  of  Union's  financial  system  and  the  security  of  its  citizens.  According  to 
Europol,1 as much as 0.7-1.28% of the European Union’s (EU) annual Gross Domestic 
Product  is  ‘detected  as  being  involved  in  suspect  financial  activity’.2  The  fight  against 
money laundering and terrorism financing is therefore an important priority for the Union 
and part of delivering the Security Union.  

Over time, the Union has developed a solid regulatory framework for preventing money 
laundering  and  terrorist  financing,  in  line  with  international  standards  adopted  by  the 
Financial  Action  Task  Force.  The  regulatory  framework  needs  to  keep  pace  with  the 
increasing  integration  of  financial  flows  in  the  internal  market,  the  evolving  trends, 
technological  developments  and  the  ingenuity  of  criminals  to  exploit  any  gaps  or 
loopholes in the system.  

This Communication summarises a set of reports relating to the Union’s legal framework 
for  preventing  money  laundering  and  terrorist  financing  and  its  implementation.  It  is 
accompanied  by  the  Commission’s  biennial  supranational  risk  assessment3  of  money 
laundering and terrorist financing risks facing the Union’s internal market, as well as an 
assessment  of  recent  alleged  money  laundering  cases  involving  EU  credit  institutions, 
and  Reports  on  cooperation  between  Financial  Intelligence  Units4  and  on  the 
interconnection of national centralised automated mechanisms of the Member States on 
bank accounts.5 

The findings set out in this Communication and in the reports adopted today are intended 
to  inform  the  debate  about  how  the  anti-money  laundering/countering  the  financing  of 
terrorism  framework  could  be  further  improved  and  to  provide  the  basis  for  further 
discussions with  relevant stakeholders. 

II.  CONTEXT: DEVELOPMENT OF THE LEGAL FRAMEWORK TO DATE  

The  Union  has  considerably  strengthened  its  legal  framework  on  preventing  money 
laundering  and  terrorist  financing  in  recent  years.  The  4th  Anti-money  Laundering 

1 Europol is the EU’s law enforcement agency, https://www.europol.europa.eu/ 
2 Europol Financial Intelligence Group, Report ‘From suspicion to action’, 2017: 
https://www.europol.europa.eu/publications-documents/suspicion-to-action-converting-financial-
intelligence-greater-operational-impact 
3 Report from the Commission to the European Parliament and the Council on the assessment of the risk of 
money  laundering  and  terrorist  financing  affecting  the  internal  market  and  relating  to  cross-border 
activities  COM (2019) 370. 
4  Report  from  the  Commission  to  the  European  Parliament  and  the  Council  assessing  the  framework  for 
cooperation between Financial Intelligence Units COM(2019) 371 
5  Report  from  the  Commission  to  the  European  Parliament  and  the  on  the  interconnection  of  national 
centralised  automated  mechanisms  (central  registries  or  central  electronic  data  retrieval  systems)  of  the 
Member States on bank accounts COM(2019) 372. 

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Directive6 was adopted in May 2015 and had to be transposed by Member States by June 
20177.  

As part of the Action Plan for strengthening the fight against terrorist financing adopted 
in February 20168, and in response to the Panama Papers revelations of April 2016, the 
5th Anti-money Laundering Directive9  was adopted in April 2018 and Member States are 
to transpose it into national law by January 2020. This revision increases transparency of 
beneficial  ownership  information,  gives  Financial  Intelligence  Units  wider  access  to 
information,  enhances  the  cooperation  between  supervisors,  and  regulates  virtual 
currencies and pre-paid cards to better prevent terrorist financing. 

significantly 

As  regards  the  financial  sector,  new  rules  on  information  sharing  and  dissemination 
should 
improve  cooperation  among  prudential  and  anti-money 
laundering/countering  the  financing  of  terrorism  supervisors10,  and  strengthen  the 
European  Banking  Authority’s  role  in  ensuring  compliance  with  Union  rules  and 
enhancing  cooperation  on  issues  related  to  anti-money  laundering  and  combating  of 
terrorism financing. 
Moreover,  Directive  2018/1673  on  combating  money  laundering  by  criminal  law11 
complements  this  preventive  framework  by  harmonising  the  definition  of  the  criminal 
offence  of  money  laundering  and  related  sanctions.  The  Directive  entered  into  force  in 
December 2018 and Member States have until December 2020 to transpose it. 
Directive 2019/1153  facilitating the the use of financial and other information12 further 
strengthens  the  criminal  law  legal  framework  by  speeding  up  the  access  to  financial 
information for law enforcement authorities and by enhancing the exchange of financial 
information  between  law  enforcement  authorities  and  Financial  Intelligence  Units.  The 
Directive will enter into force in August 2019 and Member States will have until August 
2021 to transpose it. 

the  European  Parliament  and  of 

6  Directive  (EU)  2015/849  of  the  European  Parliament  and  of  the  Council  of  20  May  2015  on  the 
prevention of the use of the financial system for the purposes of money laundering or terrorist financing, 
amending  Regulation  (EU)  No  648/2012  of  the  European  Parliament  and  of  the  Council,  and  repealing 
Directive  2005/60/EC  of 
the  Council  and  Commission 
Directive 2006/70/EC, OJ L 141, 5.6.2015, p. 73. 
7 The Commission is assessing the transposition of the 4th Anti-Money Laundering Directive, while also 
working  to  verify  that  the  rules  are  implemented  by  Member  States.  The  Commission  has  launched 
infringement  procedures  against  all  28  Member  States  as  it  assessed  that  the  communications  received 
from the Member States did not represent a complete transposition of this Directive. 
8 COM(2016) 050 final. 
9  Directive  (EU)  2018/843  of  the  European  Parliament  and  of  the  Council  of  30  May  2018  amending 
Directive  (EU) 2015/849 on the prevention of the  use  of the  financial system  for the purposes of  money 
laundering  or  terrorist  financing,  and  amending  Directives  2009/138/EC  and  2013/36/EU,  OJ L 156, 
19.6.2018, p. 43. 
10  Directive  (EU)  2019/878  of  the  European  Parliament  and  of  the  Council  of  20  May  2019  amending 
Directive 2013/36/EU as regards exempted entities, financial holding companies, mixed financial holding 
companies, remuneration, supervisory measures and powers and capital conservation measures, OJ L 150, 
7.6.2019. 
11  Directive  (EU)  2018/1673  of  the  European  Parliament  and  of  the  Council  of  23  October  2018  on 
combating money laundering by criminal law; PE/30/2018/REV/1; OJ L 284, 12.11.2018, p. 22–30. 
12  Directive  (EU)  of  the  European  Parliament  and  the  Council  of  20  June  2019  laying  down  rules 
facilitation  the  use  of  financial  and  other  inforamtion  for  the  prevention,  detection,  investigation  or 
presecution  of  certain  criminal  offences,  and  repealing  Council  Decision  2000/642/JHA,  OJ  L  186, 
11.7.2019. 

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III.  MONEY  LAUNDERING  AND  TERRORISM  FINANCING  RISKS  AND 

AREAS FOR IMPROVEMENT 

Despite  the  recent  enhancement  of  the  legislative  framework,  challenges  remain.  The 
Commission  publishes  today  a  series  of  reports  that  assess  risks  and  identify  areas  for 
improvement. 

a)  Assessment of risks affecting the Union 

Firstly,  the  Commission  presents  a  supranational  risk  assessment  of  the  money 
laundering and terrorist financing risks affecting the Union internal market and relating 
to  cross  border  activities,  as  required  by  Article  6  of  the  4th  Anti-Money  Laundering 
Directive. It updates the first supranational risk assessment adopted in 201713 and follows 
up on recommendations  made to  actors involved in  the  fight against money  laundering 
and terrorist financing.14  

The  report  shows  that  most  recommendations  of  the  first  supranational  risk  assessment 
have  been  implemented  by  the  various  actors.  At  the  same  time,  some  horizontal 
vulnerabilities  remain,  particularly  on  anonymous  products,  on  identification  of 
beneficial owners and on new unregulated products like virtual assets. Some of them are 
expected  to  be  addressed  through  the  upcoming  transposition  of  the  5th  Anti-Money 
Laundering Directive, for example through the inclusion of virtual currency providers in 
the  scope  of  the  Directive  and  the  expansion  and  wider  accessibility  of  beneficial 
ownership  registers.  Other  horizontal  vulnerabilities  relating  to  Financial  Intelligence 
Units  and  financial  supervision  have  been  identified  in  the  Commission’s  report  on 
Financial  Intelligence  Units  and  the  Commission’s  report  on  the  assessment  of  recent 
alleged anti-money laundering  cases involving EU credit institutions. The report makes 
recommendations  for  each  sector  and  the  compliance  with  these  recommendations  will 
be followed up in the next supranational risk assessment to be issued within two years. 

b)  Areas  for  improvement  of  the  EU  anti-money  laundering  /  terrorism 

financing framework 

The report on the assessment of recent alleged money laundering cases involving EU 
credit  institutions15  draws  on  facts  from  case  studies  covering  a  sample  of  ten  public 
cases involving credit institutions during the period 2012-2018. It assesses the role of the 
credit  institutions,  and  the  powers  and  actions  of  the  anti-money  laundering/countering 
financing of terrorism and prudential supervisors. The report is presented as a response to 
the  Council  conclusions  on  an  Anti-Money  Laundering  action  plan  of  4  December 
2018,16  that  invited  the  Commission  to  conduct  “a  post-mortem  review  of  the  recent 
alleged money laundering cases involving EU credit institutions.”  

13 COM(2017) 340 final, 26.6.2017. 
14 The assessment of risks associated with third countries posing significant threats to the Union financial 
system  remains  a  distinct  process  from  this  supranational  risk  assessment  and  is  conducted  through  the 
Commission  delegated  acts  identifying  such  high-risk  third  countries.  The  current  list  of  high-risk  third 
countries is set out in Commission Delegated Regulation (EU) 2016/1675 of 14 July 2016 supplementing 
Directive  (EU)  2015/849  of  the  European  Parliament  and  of  the  Council  by  identifying  high-risk  third 
countries with strategic deficiencies, as last amended by Delegated Regulation (EU) 2018/1467 of 27 July 
2018.  Following  the  Council’s  rejection  of  the  Delegated  Regulation  adopted  by  the  Commission  on  13 
February 2019, which would have replaced the current list, the Commission is engaging with the European 
Parliament and  Council on a  refined  methodology and  has intensified its engagement  with relevant third 
countries and with the Financial Action Task Force (FATF).   
15 Report from the Commission to the European Parliament and the Council on the assessment of recent 
alleged money laundering cases involving EU credit institutions  COM(2019) 373. 
16  https://www.consilium.europa.eu/en/press/press-releases/2018/12/04/money-laundering-council-adopts-
conclusions-on-an-action-plan-for-enhanced-monitoring/ 

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The  analysis  of  the  selected  cases  revealed  substantial  incidents  of  failures  by  credit 
institutions to comply with core requirements of the Anti-Money Laundering Directive, 
such as risk assessment, customer due diligence, and reporting of suspicious transactions 
and activities to Financial Intelligence Units. In some cases, supervisors were effective in 
pre-emptively  identifying  shortcomings  in  credit  institutions  and  requiring  remedial 
action, but in a number of other cases, supervisors only intervened after significant risks 
had  materialised  or  in  the  face  of  repeated  compliance  and  governance  failures.  The 
timeliness  and  effectiveness  of  subsequent  supervisory  measures  imposed  on  credit 
institutions  varied  greatly.  Group  supervision  from  an  anti-money  laundering  and 
countering  of  financing  terrorism  perspective  was  largely  deficient.  Regulatory  and 
supervisory  fragmentation  impinged  on  the  effectiveness  of  cooperation  among  various 
actors concerned. 

The  report  on  Financial  Intelligence  Units17  assesses  the  framework  for  Financial 
Intelligence  Units’  cooperation  with  third  countries  and  obstacles  and  opportunities  to 
enhance  cooperation  between  Financial  Intelligence  Units  in  the  European  Union, 
including  the  possibility  of  establishing  a  coordination  and  support  mechanism.  The 
report is published in response to the legal obligation on the Commission under Article 
65(2) of the Anti-Money Laundering Directive.  

The  assessment  showed  that  some  Financial  Intelligence  Units  fail  to  engage  in  a 
meaningful  dialogue  with  obliged  entities  by  giving  quality  feedback  on  suspicious 
transaction  reports.  The  lack  of  templates  for  reporting  also  hampers  the  quality  of  the 
reports by obliged entities. Several Financial Intelligence Units do not fully comply with 
their  obligation  to  exchange  information  with  other  Financial  Intelligence  Units.  The 
recurrent  technical  difficulties  in  the  functioning  of  the  FIU.net  seem  to  have  been  an 
important factor and make it more cumbersome for Financial Intelligence Units to share 
information.  The  assessment  also  showed  that  the  lack  of  regulation  of  exchanges  of 
information  between  Member  States’  Financial  Intelligence  Units    and  Financial 
Intelligence Units of third countries led to a non-harmonised approach to such exchanges. 
The  compliance  of  such  exchanges  with  the  Union’s  data  protection  framework  also 
needs to be ensured. 

Finally,  the  report  on  the  interconnection  of  national  centralised  automated 
mechanisms of the Member States on bank accounts,18 is presented as a response to 
Article 32a(5) of the Anti-Money Laundering Directive which requires the Commission 
to  assess  the  conditions  and  the  technical  specifications  and  procedures  for  ensuring 
secure and efficient interconnection of the centralised automated mechanisms. Therefore, 
the  report  assesses  the  various  IT  solutions  at  EU  level,  already  operational  or  being 
currently under development, which may serve as models for a possible interconnection 
of  the  centralised  mechanisms.  The  report  concludes  that  the  interconnection  is 
technically  feasible  and  that,  given  that  a  future  EU-wide  interconnection  of  the 
centralised  mechanisms  would  speed  up  access  to  financial  information  and  facilitate 
cross  border  cooperation,  the  Commission  intends  to  further  consult  with  relevant 
stakeholders,  governments,  as  well  as  Financial  Intelligence  Units  ,  law  enforcement 
authorities  and  Asset  Recovery  Offices  as  potential  “end-users”  of  a  possible 
interconnection  system.  For  an  interconnection  to  be  achieved,  a  legislative  instrument 
would be required. 

17 Report from the Commission to the European Parliament and the Council assessing the framework for 
cooperation between Financial Intelligence Units COM(2019) 371. 
18  Report  from  the  Commission  to  the  European  Parliament  and  the  on  the  interconnection  of  national 
centralised  automated  mechanisms  (central  registries  or  central  electronic  data  retrieval  systems)  of  the 
Member States on bank accounts COM(2019) 372. 

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IV.  CONCLUSION  

The  fight  against  money  laundering  and  terrorist  financing  is  a  continuous  task 
underpinned by a regulatory framework that requires regular updates to  keep pace with 
new  developments.  Much  has  been  achieved  to  improve  the  existing  framework, 
particularly through the legislative adjustments made in recent years. Yet there are major 
divergences  in  the  application  of  the  framework,  presenting  a  structural  problem  in  the 
Union’s capacity to prevent that the financial system is used for illegitimate purposes. 

In an integrated internal market, fragmentation and failures in the application of the legal 
framework pose threats to the integrity of the Union’s financial system and the Union’s 
security more generally. This calls for continued determined, rapid and coherent action to 
ensure  legislation  on  anti-money  laundering  /countering  the  financing  of  terrorism  is 
fully  implemented  in  a  coherent  and  effective  manner,  notably  by  key  competent 
authorities  such  as  supervisors  and  Financial  Intelligence  Units.  The  Commission  will 
continue  to  monitor  the  implementation  of  the  updated  legal  framework  and  of  the 
recommendations in its supranational risk assessment.  

Whereas  many  risks  and  shortcomings  have  already  been  or  will  shortly  be  addressed 
thanks  to  the  recent  changes  in  the  regulatory  framework,  some  of  the  shortcomings 
identified are structural in their nature and have not yet been addressed. 

The findings in the reports adopted today are intended to inform the debate about how the 
framework for anti-money laundering and countering the financing of terrorism could be 
further  improved  and  to  provide  the  basis  for  further  discussions  with    relevant 
stakeholders. 

to 

be 

the 

could 

given 

further 

harmonising 

Consideration 
anti-money 
laundering/countering  the  financing  of  terrorism  rulebook.  One  option  would  be  the 
transformation of the Anti-Money Laundering Directive into a Regulation, which would 
have  the  potential  of  setting  a  harmonised,  directly  applicable  Union  regulatory  anti-
money laundering framework. Different alternatives could also be envisaged in order to 
ensure  high  quality  and  consistent  anti-money  laundering  supervision  of  the  financial 
sector, which may require conferring specific anti-money laundering supervisory tasks to 
a  Union  body.  Moreover,  the  assessments  show  a  need  for  a  stronger  mechanism  to 
coordinate  and  support  cross-border  cooperation  and  analysis  by  Financial  Intelligence 
Units.  

5