The world changes every day, and our limits become higher day by day. Technologists and scientists succeed in developing their countries and modernizing our reality. That is why judges, courts, and lawmakers must try to adjust our legal systems to the current advanced-developed position.
The anti-money laundering law changes very fast. The last directive was introduced on 23rd October 2018 when the previous one was available from 30th of May in the same year.
The sixth directive is called Directive (EU) 2018/1673 of the European Parliament and the Council of the European Union of 23 October 2018 on combating money laundering by criminal law. The document is based on the Treaty on the Functioning of the European Union, the proposal from the European Commission, and agreement from the national parliaments.
The Directive starts with analyses that the issue of money laundering and what comes with it, financing terrorism, is still a significant problem in the Union which has a horrible influence on its reputation and integrity. They want to fully focus on getting better cooperation between different organizations/individuals.
Moreover, the document emphasizes the need to take the anti-money laundering law as seriously as other international problems. The Union agrees that the organization which should continue to take part in the war against financing terrorism is Financial Action Task Force (FATF) Recommendations as well as other international organizations. The Union acts must be relevant to the International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation which was adopted by FATF in February 2012 (the ‘revised FATF Recommendations’). This Directive also requires from the Union, which is the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism, to transfer the Convention’s presuppositional into its legal order.
Furthermore, this directive is focused on making the criminalization of money laundering more comprehensive as the current system which is based on the Council Framework Decision 2001/500/JHA doesn’t meet the requirements of the Union and also is not able to help in cooperation between the competent authorities in different Member States. What is more, this directive wants to introduce a definition of money laundering which is uniform in all Member States so all of them would be able to decide if the serious crimes are predicate offenses for money laundering and the offenders can be punished by imprisonment. As well as, all the Member States who do not already include some behavior as the offenses should start doing so within the categories of offenses listed in this Directive. The Member States should learn to delimit the offenses in each category. If according to the national law some activities are considered as a legal offense, they should also be a criminal activity described in this Directive. When the Union allows specifying and providing a different form of punishments, other than criminal sanctions, then there is no need to clarify the behavior as predicate offenses.
Another topic is virtual currencies. It is a new issue according to world’s developments. All Member States should be able to recognize and punish authorities who try to commit a crime related to e-currencies, and they should reduce the risk of virtual money laundering.
Moreover, Member States should deliberate to introduce additional penalties for public office holders in the national frameworks and in consonance with their legal traditions. In this Directive, tax crimes, which are related to direct and indirect taxes, should be recognized as criminal activity according to FATF Recommendations. The tax crimes should be punishable by the above recommendations as the differences in separate countries accorded to the definition of tax crimes may vary, and this Directive does not want to harmonize tax conducts in national laws. The cooperation between different Member States and third parties should flow effectively and quickly with the accordance to the national laws and Union legal frameworks. It is very important to remember about help between countries because it may have an influence on punishing the correct authority. The international cooperation should be very smooth, sufficiently developed, and highly professional.
On the other hand, this Directive doesn’t take under consideration to apply anti-money laundering law to criminal offenses affecting the Union’s financial interests. This Directive, the Member States cannot use the Directive by means to the national level. According to Article 325(2) of the Treaty on the Functioning of the European Union (TFEU), the Member States are obliged to counter frauds affecting Union’s interest as they measure their own financial interests. What is more, the crime is also committed when the perpetrator who generated the property is involved in money laundering. It is called ‘self-laundering’. The money laundering activity should be punished when this activity does not end on simple possession or use of the property but also extends to transfer, conversion, concealment, and disguise of property and may result in further damages.
This Directive also wants to make detecting and punishing criminal activities more effective regardless it took place in a different Member State or in the third country. The law should not require a precisely established money laundering activity which generated the property. Member States should be able to establish it, taking into account their national legal systems.
Another aspect is to identify the definition of money laundering activities which are punishable. The crime should be committed intentionally and with the knowledge that the property was derived from criminal activity. It doesn’t matter if it was directly or indirectly from criminal activity. Member States can adopt a new more specific and extended definition of money laundering which includes recklessness and negligence crimes. Also, Member States which apply this conduct should be able to use and understand the way of punishment. Member States must be ensured that the money laundering crimes are punishable by a maximum term of imprisonment of at least four years. What is more, Member States should also provide additional sanctions or measures such as fines, temporary or permanent exclusion from access to public funding, including tender procedures, grants, and concessions, temporary disqualifications from the practice of commercial activities or temporary bans on running for elected or public office. Of course, the judge and the court who are involved in cases are responsible for deciding either to apply or not any additional sanctions.
As I mentioned earlier, Member State must give the court and the judge a possibility to decide about the case with prior considerations of all the circumstances which occurred and making with it a fair judgment. But they should apply for aggravating circumstances where the national law provides the criminal offenses laid down in Council Framework Decision 2008/841/JHA.
Another aspect is the fact that freezing and confiscation of the instrumentalities and proceeds of crime can remove the financial incentives which drive crime. Directive 2014/42/EU is responsible for imposing minimal rules on the freezing and confiscation of the instrumentalities as well as make requirements to the Commission about reporting to the European Parliament and to the Council on its enforcement and make any possible and adequate changes. Member States should enable confiscation in any circumstance where it is impossible to initiate or conclude criminal proceedings, including in cases where the offender died. According to the 2014 Directive, the European Parliament and the Council will submit to the Commission a report which analyzes the feasibility and benefits of developing common rules of a conviction of a person or people for the criminal activities. It must take into considerations the traditions and differences in legal systems between Member States.
Moreover, this Directive requires from Member States to introduce a special jurisdiction which will help and speed up the process of investigating money laundering’s crimes. Each Member State should make sure that their technology developed as the investigation should cover situations not only where technology is from their territory but also when it is not.
Furthermore, this Directive follows previous laws which are Council Framework Decision 2009/948/JHA and Council Decision 2002/187/JHA. Also, investigators and all the special officers involved in work against money laundering should get all the necessary resources such as trainings, highly advanced technology, and sufficient staff to help them resolve the issues in the best and quickest possible way but at the same time there is a rule of protecting personal data.
What is more, this Directive took a huge impact from Human Rights law. This Directive considering the European Convention for the Protection of Human Rights and Fundamental Freedoms, the International Covenant on Civil and Political Rights, and other human rights obligations under international law. Which comes into conclusion that Human Rights such as a right to a fair trial or access to a lawyer are respected even if an individual is suspected of criminal activity.
According to Article 5 of the Treaty of European Union, the most effective may be done only if all Member State will work together at the Union level. The only exceptions are the United Kingdom, Ireland, and Denmark.
Comparing it to the previous directives, the sixth anti-money laundering directive is more modern and relevant to 21st-century rules. Currently, it is focused on highly advanced technology, virtual currencies, and the importance of working together. They also remember about respecting Human Rights and treat a suspect as innocent as long as he will not be sentenced. This Directive puts a huge impact on cooperation and international coordination between Member States. They want to improve their work against money laundering and terrorism.
The first directive is called COUNCIL DIRECTIVE of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering (91/308/EEC) was more concerned about public opinion and freedom of capital movement. The biggest difference is the fact that almost 30 years ago money laundering was connected to drug-trafficking crimes whereas now it is connected to terrorism. What is more, the organizations were obliged to keep for 5 years copies and references of the identification documents relating to transactions. Currently, everything is highly modernized and all the information they check by pushing a correct button on a keyboard.
The second directive - Directive 2001/97/EC of the European Parliament and of the Council of 4 December 2001 amending Council Directive 91/308/EEC on prevention of the use of the financial system for the purpose of money laundering was still concerned about public morals. All of the currency exchange offices and money transmitters are suspected of money laundering. That Directive still only obliged Member States to combat the laundering of the proceeds of drug offenses. The notaries and independent legal professionals should make provisions of the Directive when they are involved in financial transactions. The European Convention for the Protection of Human Rights and Fundamental Freedoms and the Treaty of the European Union should be used according to auditors, external accountants, or tax advisors when currently these rights are used towards the suspects.
The third was DIRECTIVE 2005/60/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing and it focused on terrorism financing which was a new assumption. That Directive took into consideration the old view of the importance of the possible use of the single market as well as a modern way of used FATF Recommendations. It also introduced a definition of ‘beneficial owner’. Every cash payment of EUR 15,000 or more should be monitored. The only exception remains a lawyer who can protect his clients from anti-money laundering policy if he is not a part of the crime. The suspicious transactions should be reported to the financial intelligence unit (FIU). All the transaction should be transferred from paper documents into the electronic data. It introduced a high level of transparency and consultation with institutions and persons covered in that Directive and with the European Parliament the Council.
The fourth was 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. All the purposes and way of working against money laundering, terrorism financing, and organized crimes remain the same as it is now. The change is in reducing the amount of cash which should be taken under the consideration from 15,000 euros to 10,000 euros. It also introduced electronic money products. Tax crimes were taken care of in the same way as it is currently. That Directive was applied to activities which were performed on the internet. It was concerned about the gambling sector services and applied a law that customers due diligence measures for single transactions amounting 2,000 euros or more. Member States should encourage their authorities to provide a well-organized and quick range of cross-border cooperation for the purposes of that Directive. National law in Member State should comply with that Directive in order to punish those who were involved in money laundering.
The fifth was 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. The United Nations, Interpol, and Europol reported a huge connection between terrorism attacks and organized crimes. The further increase of transparency was introduced. Exchange services should report to Union suspicious activities. Union should adopt an integrated approach on the compliance of national AML/CFT regimes. The prepaid card law was introduced, and thresholds were lowered in the case of remote payment transactions which amount exceeds 50 EUR. The overall need or Member States to work together and make the process of investigating easier and faster.
The anti-money laundering law was changing over the years. Currently, it is mainly focused on reducing the terrorism financing which leads to a reduction of terrorism attacks and organized crimes. The Council and European Parliament are aware of advanced technologies and virtual currencies that is why full transparency and obligation to report any suspicious activities are required. The Union needs to work together to stop these horrible consequences of activities.