Diamonds are (not) forever: NCA keeps up pressure on unexplained wealth
No sooner are we one year into the new regime under the Money Laundering Regulations 2017 than a further EU instrument has been adopted. The Fifth Money Laundering Directive was formally adopted on 19 June 2018 with a deadline of 10 January 2020 as the date by which EU Member States have to transpose the provisions into national law.
Officially called “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” – this fifth directive introduces new provisions to address the ever-changing economic crime landscape so as to allow law enforcement to keep up.
Reference is made to new emerging trends in how organised crime groups finance and conduct their operations and the question is asked whether alternative financial systems facilitated by modern technology can continue to be exempt from legal requirements. The answer coming back is no…
To that end the key provisions introduced are:
i. ensuring a high level of safeguards for financial flows from high-risk third countries;
ii. enhancing the powers of EU Financial Intelligence Units and facilitating their cooperation;
iii. ensuring centralised national bank and payment account registers or central data retrieval systems in all Member States;
iv. tackling terrorist financing risks linked to virtual currencies; and
v. tackling risks linked to anonymous pre-paid instruments (e.g. pre-paid cards).
Although in the spirit of the Fourth Money Laundering Directive and the risk-based approach within there is reference to how measures taken “should be proportionate to the risks”.
How this new regime will impact on the UK given the deadline for implementation into national law is beyond the date of the UK’s withdrawal from the EU is a key question. Whilst negotiations continue in relation to the transition period and what shape the UK’s future relationship with the EU will look like it is hard to say for certain in legislative terms. However, what is clear is that the UK has always taken a leadership role in fighting economic crime and has to date been accused of “gold-plating” (going further than required) in terms of putting EU money laundering provisions into domestic legislation. Ministerial statements to date have suggested that: “on balance, given the Government itself is seeking a transitional period, we consider it likely that most, if not all, of the new AMLD will have to be transposed in the UK as a matter of law.” Indeed, if we are seeking to have a model of trade co-operation based on the single-market or such like the EU institutions and other Member States will expect some level of regulatory convergence.
In addition the UK will remain a member of the Financial Action Task Force (FATF), an inter-governmental body who sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. As a result of the UK’s membership of FATF it will continue to be involved in setting the standards upon which the EU legislation is based. With that in mind the recently enacted Sanctions and Anti-Money Laundering Act 2018 (dubbed the first Brexit-Bill) makes provision for the implementation of standards published by the Financial Action Task Force from time to time relating to combating threats to the integrity of the international financial system.
Indeed, in the UK Anti-Corruption Plan 2017-22, further enhancing anti-money laundering and counterterrorist financing capability alongside stronger law enforcement, prosecutorial and criminal justice action, are set out as core actions to “strengthen the integrity of the UK as an international financial centre” and tackle illicit financing.
It seems that the UK will not be retreating from this commitment any time soon.
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