A Money-Laundering Cleanup Falls Short
The European Union's fight against money laundering is being hampered by member states' improper implementation of EU law across the bloc, according to a new report.
EU member states "fell some way short" of creating a consistent anti-money laundering regime across the EU when they implemented the 2001 second money laundering directive (2MLD), concluded the study released on Thursday (21 December) by the City of London Corporation—a local government body for London's financial district.
"An effective anti-money laundering regime, which deters and detects determined criminals without placing unrealistic burdens on honest businesses and their advisors, is essential if we are to maintain the integrity and effectiveness of the financial system," said Michael Snyder from the City of London Corporation.
"Within the EU single market, it is also vital that this regime operates in a uniform manner," he added in his statement, explaining that there were major discrepancies in the directive's scope and interpretation across the different EU countries.
The report pointed out that the way member states identified and reported suspicious actions differed from each other, while some countries are too slow to react to fishy money movements making it impossible to take action against them.
It also says that the 2MLD rules on "tipping off" clashes with the EU's own Data Protection Directive giving the customer the right to obtain access about him- or herself.
The directive was meant to be implemented in 2003 for the 15 old EU member states and in 2004 for the 10 new EU countries. But Italy was six months late while, Greece implemented the law two and a half years late.
The City of London analysed in detail how the directive was implemented in six countries - UK, Spain, Italy, Greece, Poland and Lithuania.
The report comes as European policy makers and regulators will strive to implement the third money laundering directive in 2007.