Anti-Geldwäsche-Richtlinie: Abschreckung für Terroristen oder Bedrohung bürgerlicher Freiheiten?[en] 

The first Money Laundering Directive of 1991 required the imposition of an obligation on financial institutions to establish customers’ identity and report any suspicion of money laundering. It was based on the 40 recommendations of the Financial Action Task Force on money-laundering (FATF), of which the EU is a member. This is an inter-governmental body established by the G7, promoting anti-money laundering policy at national and international level. 

The second directive of 2001 extended the number of crimes to which the provisions applied and widened the range of professions who had to observe it to include lawyers, auditors, accountants, notaries, casinos and estate agents. It also provided for the establishment of financial intelligence units in each member state to which suspicious transactions reports (SRTs) were to be made. 

The proposed third directive is intended to incorporate into EU law revisions made to the FATF recommendations in June 2003. It also intends to extend the provisions to any financial transaction which might be linked to terrorist activities.

Data Protection

The main issue can be stated briefly: requiring information for security reasons versus individual privacy rights. How far should such legislation go in requiring details of financial transactions to be ascertained, which organisations should be subject to the requirements and should there be exceptions, for example for information handled in confidence by lawyers?

Haste

The second Money Laundering Directive was adopted in 2001. It was due to be transposed into national law by June 2003 but only around half the member states have done so. In those where the directive has been implemented, the level and therefore the burden of reporting has varied considerably. A commitment within the directive not to legislate further until an evaluation had been carried out has not been respected. In addition, legal challenges against the directive have been launched in Belgium and Portugal. In the light of the serious concerns over the second directive, proposals for a third directive, therefore, are seen by many as premature and inappropriate.

Effectiveness

Even leaving aside the above points, there is still a question of to what extent this legislation is actually effective in combating money laundering. Is it fulfilling its function or does it simply put irksome and money-wasting obstacles in the way of financial transactions carried out by business and consumers? Many argue that, without the study promised, the answer to this question is unknown.

Other measures 

The Commission is also pursuing other measure to cut off financing for terrorists:

• Mandatory declaration of large sums of money being taken across external borders (prevention of money laundering by means of customs co-operation (see EurActiv 18 Feb 2005)
• Easing the way to seize proceeds of crime (2001 Framework Decision on money laundering, the identification, tracing, freezing, seizing and confiscation of instrumentalities and the proceeds from crime). 

A European lawyers association, the Council of the Bars and Law Societies of Europe, has argued that the reporting provisions of the current directive threaten the independence of lawyers and therefore the fundamental right to legal advice and representation. In a letter to the Commission on 8 February 2005, the Presidents of the European Bars called for a halt to the proposed third directive, arguing that existing reporting requirements imposed on lawyers were already threatening fundamental rights as citizens could not, in some circumstances, consult a lawyer without the threat that the lawyer would report them to government authorities.

The European Parliament’s rapporteur on the issue, Hartmut Nassauer, is also concerned that reporting obligations placed on lawyers are tantamount to altering the status of the lawyer from that of independent advisor to an agent of the state. He calls for the proposal to be withdrawn until an assessment of the effect of the second directive has been carried out. 

MEP Theresa Villiers, member of Parliament’s Economic and Monetary Affairs Committee, sees the directive as putting obstacles in the way of ordinary individuals wishing to open bank accounts. She also points out that the extra requirement on financial institutions to ascertain the identity of not only their customers but the beneficiaries of their customers’ transactions, puts an unacceptable burden on industry. 

KPMG, leading financial services firm, has warned that universities and business schools could find themselves caught under the third directive as it requires that any cash payment of over €15,000 be scrutinized for possible laundering. Overseas students often pay fees for their entire degree in up-front cash payments.