CELEX: 51990PC0106
Language: en
Date: 1990-03-23
Title: PROPOSAL FOR A COUNCIL DIRECTIVE ON PREVENTION OF THE FINANCIAL SYSTEM FOR THE PURPOSE OF MONEY LAUNDERING

No C 106/6                             Official Journal of the European Communities                                  28. 4. 90
                                                               II
                                                       (Preparatory Acts)
                                                  COMMISSION
              Proposal for a Council Directive on prevention of use of the financial system for the purpose of
                                                       money laundering
                                                COM(90) 106 final — SYN 254
                                      (Submitted by the Commission on 23 March 1990)
                                                         (90/C 106/06)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,                           orities, as has been undertaken, in the field of drugs, by
                                                                   the United Nations Convention Against Illicit Traffic in
                                                                    Narcotic Drugs and Psychotropic Substances, adopted
Having regard to the Treaty establishing the European              on 19 December 1988 in Vienna (hereinafter 'the Vienna
Economic Community, and in particular Article 57 (2),              Convention');
third sentence thereof,
                                                                   Whereas a penal approach should, however, not be the
Having regard to the proposal from the Commission,                 only way to combat money laundering, since the
                                                                   financial system can play a highly effective role; whereas
                                                                   reference must be made in this context to the Recom-
In cooperation with the European Parliament,                       mendation of the Council of Europe of 27 June 1980
                                                                   and to the Declaration of Principles adopted in
                                                                   December 1988 in Basle by the banking supervisory
Whereas when credit and financial institutions are used            authorities of the Group of Ten, both of which
to launder proceeds from criminal activities (hereinafter          constitute major steps in order to prevent the use of the
'money laundering'), the soundness and stability of the            financial system for purposes of money laundering;
particular institution concerned and confidence in the
financial system as a whole could be seriously                     Whereas money laundering is usually carried out in an
jeopardized, thereby losing the trust of the public;               international context so that the criminal origin of the
                                                                   funds can be better disguised; whereas measures exclu-
                                                                   sively adopted at a national level, without taking account
Whereas lack of Community action against money laun-               of international coordination and cooperation, would
dering could lead Member States, with the purpose of               have very limited effects;
protecting their financial system, to adopt measures
which could be inconsistent with the completion of the
single market; whereas, in order to facilitate their               Whereas any measures adopted by the Commission in
criminal activities, launderers could try to take advantage        this field should be consistent with other action
of the freedom of capital movements and freedom to                 undertaken in other international fora; whereas the
supply financial services which the integrated financial           Commission, to this end, has participated, together with
area involves, if certain coordinating measures are not            fifteen Community and non-Community countries, in
adopted at Community level;                                        the important work carried out by the Financial Action
                                                                   Task Force on money laundering, established in July
                                                                   1989 by the Paris Summit of the Seven Most Developed
Whereas money laundering has an evident influence on               Countries;
the rise of organized crime in general and drug traf-
ficking in particular; whereas there is more and more              Whereas the European Parliament has requested the
awareness that combating money laundering is one of                Commission, in several resolutions, to establish a global
the most effective means of opposing this form of                  Community programme to combat drug trafficking,
criminal activity, which constitutes a particular threat to        including provisions on prevention of money laundering;
Member States' societies;
                                                                   Whereas, in order to avoid the difficulties of establishing
Whereas money laundering must be mainly combated by                a generally accepted definition of money laundering it is
penal means and within the framework of international              appropriate to follow the definition adopted by the
cooperation among judicial and law enforcement auth-              Vienna Convention; whereas, however, since the
 ---pagebreak--- 28. 4.90                              Official Journal of the European Communities                                No C 106/7
phenomenon of money laundering not only affects                 HAS ADOPTED THIS DIRECTIVE:
proceeds from drug offences, but also those from any
serious crimes, this definition should be extended to
include laundering of proceeds of serious criminal                                           Article 1
offences, as defined by the Member States;
                                                                For the purposes of this Directive,
Whereas making money laundering a criminal offence in           — credit institution is defined in accordance with the
the Member States, although it goes beyond the scope of             first indent of Article 1 of Council Directive
the financial system, constitutes a necessary condition for         77/780/EEC (>),
any action to combat this phenomenon and in particular
to permit cooperation between financial institutions or         — financial institution means an undertaking other than
banking supervisors and judicial authorities; whereas, in           a credit institution whose principal activity is to carry
this context, ratification and implementation by the                out one or more of the operations included in Nos 2
Member States of the Vienna Convention is an essential              to 12 and 14 of the list annexed to Council Directive
measure to oppose money laundering in the field of                  89/646/EEC (2), as well as an insurance company
drugs;                                                              duly authorized according to Council Directives
                                                                    73/239/EEC (3) and 79/267/EEC (4),
Whereas ensuring that credit and financial institutions
require identification of their customers when entering         — money laundering means:
into business relations or conducting transactions, and
that they keep records of the identity documents                    — the conversion or transfer of property, knowing
required, are necessary to avoid launderers' taking                      that such property is derived from a serious
advantage of anonymity to carry out their criminal acti-                 crime, for the purpose of concealing or disguising
vities; whereas such provisions must also be extended, as                the illicit origin of the property or of assisting any
far as possible, to any beneficial owners;                               person who is involved in committing such an
                                                                         offence or offences to evade the legal conse-
                                                                         quences of his action,
Whereas ensuring that credit and financial institutions
examine with special attention any unusual operation not
having an apparent economic or lawful purpose and that                   and
they refrain from entering into any suspected money-
laundering transaction is necessary in order to preserve            — the concealment or disguise of the true nature,
the soundness and integrity of the financial system as                   source, location, disposition, movement, rights
weil as to contribute to combating this phenomenon;                      with respect to, or ownership of property,
                                                                         knowing that such property is derived from a
                                                                         serious crime,
Whereas preserving the financial system from money
laundering is a task which cannot be carried out by the
                                                                — property means assets of every kind, whether
judicial and law enforcement authorities without the
                                                                    corporeal or incorporeal, movable or immovable,
cooperation of credit and financial institutions and their
                                                                    tangible or intangible, and legal documents or
supervisory authorities; whereas banking secrecy must be
                                                                    instruments evidencing title to or interest in such
lifted in criminal cases; whereas a mandatory system of
                                                                    assets,
reporting suspicious transactions is the most effective
way to accomplish such cooperation; whereas a special
protection clause is necessary to exempt employees and          — serious crime means a crime specified in Article 3 (1)
directors from responsibility by breaching restrictions on          (a) and (c) of the Vienna Convention, terrorism and
disclosure of information;                                          any other serious criminal offence (including in
                                                                    particular organized crime), whether or not
                                                                    connected with drugs, as defined by the Member
Whereas establishment by credit and financial institutions          States,
of procedures of internal control and training
programmes in this field are complementary provisions
without which the other measures contained in this              — competent authorities means the national authorities
Directive could become ineffective;                                 empowered by law or regulation to supervise credit
                                                                    or financial institutions.
Whereas, since money laundering can be carried out not
only through credit and financial institutions but also
through other types of professions and undertakings             (') OJ  No   L 322, 17. 12. 1977, p. 30.
involving cash transaction business, Member States must         (2) OJ  No   L 386, 30. 12. 1989, p. 1.
extend, where applicable, this Directive to include these       (») OJ  No   L 228, 16. 8. 1973, p. 3.
professions and undertakings,                                   (4) OJ  No   L 63, 13. 3. 1979, p. 1.
 ---pagebreak--- No C 106/8                              Official Journal of the European Communities                                   28. 4. 90
                           Article 2                                                         Article 6
Member States shall ensure that money laundering of               Member States shall ensure that if, in the course of
proceeds from any serious crime is treated as a criminal          inspections carried out in credit or financial institutions
offence according to their national legislation.                  by the competent authorities, or in any other way, these
                                                                  authorities discover facts that could constitute evidence
                           Article 3                              of money laundering, they inform the relevant judicial or
                                                                  law enforcement authorities competent for criminal
Member States shall ensure that credit and financial              matters.
institutions require identification of their customers when
entering into business relations or conducting trans-
actions and, in the case of doubt whether customers are                                     Article 7
acting on their own behalf, that these institutions take
                                                                  Member States shall ensure:
reasonable measures to establish the real identity of the
persons on whose behalf a transaction is carried out or
an account is opened. Credit and financial institutions            1. that credit and financial institutions establish adequate
shall keep records of the identity documents required                 procedures of internal control in order to prevent,
until at least five years after relations with their clients          detect and impede their engaging in operations
have ended.                                                           related with money laundering;
                           Article 4                              2. that credit and financial institutions take the appro-
                                                                      priate measures so that their employees are aware of
Member States shall ensure that credit and financial                  the provisions contained in this Directive, and that
institutions examine with special attention any unusual               they also establish special training programmes for
transaction not having an apparent economic or visible                their employees, to help them detect operations which
lawful purpose, and that such institutions refrain from               may be related to money laundering as well as to
entering into any transaction which they have reason to               instruct them as to how to proceed in such cases.
suspect may have any relation to money laundering.
                                                                                            Article 8
                           Article 5
                                                                  Member States shall extend the provisions of this
Member States shall ensure:
                                                                  Directive, where applicable, to professions and under-
1. that credit and financial institutions and their               takings, other than credit and financial institutions,
   directors and employees cooperate fully with the               which because of their involvement with cash transaction
   relevant judicial or law enforcement authorities               business, may be particularly susceptible to being used
   competent for criminal matters:                                for money laundering purposes.
   — by informing these authorities, on their own
        initiative, of any facts they discover which could                                  Article 9
        be related to a money laundering offence,
                                                                   1.    Member States shall take the measures necessary to
   — by furnishing these authorities with all information         comply with this Directive by 1 January 1992 at the
        requested in the case of any criminal inquiry or          latest.
        rogatory commission on money laundering carried
        out according to the applicable legislation.              The provisions adopted pursuant to the                    first
                                                                  subparagraph shall make express reference to this
2. that the disclosure in good faith to the relevant              Directive.
   judicial or law enforcement authorities competent for
   criminal matters by any employee or director of a
   credit or financial institution of any suspicion or belief     2.     Member States shall communicate to the
   that an operation is aimed at or connected to money            Commission the text of the main provisions of national
   laundering, shall not constitute a breach of any               law which they adopt in the field governed by this
   restriction on disclosure of information imposed by            Directive.
   contract or by any legislative, regulatory or adminis-
   trative provision, and shall not involve for such
                                                                                            Article 10
   employees and directors any civil or penal responsi-
   bility of any kind.                                            This Directive is addressed to the Member States.