Combating money laundering and terrorist financing: can the new European regulatory triptych bring greater effectiveness?
After a long and demanding negotiation process, the AML (Anti-money laundering and countering the financing of terrorism) package was finally published on June 19th. This legislative package is based on three important legal-normative pillars, embodying what is expected to be a new era in the fight against money laundering and terrorist financing (ML/FT).
A third and no less important pillar is what brings us to Directive (EU) 2024/1640 of the European Parliament and of the Council of 31 May 2024regarding the mechanisms to be created by Member States to prevent the use of the financial system for ML/FT purposes, with the obligation to transpose the directive by different Member States will take place until July 10, 2025.
The package now approved substantially modifies the operational regime of obliged entities, through the establishment of a set of common rules for all Member States in the fight against ML/FT, through the creation of a new authority supervision and, no less relevant, the forecast and requirement to comply with new due diligence requirements in the context of preventing money laundering and PBC/CFT terrorist financing.
Although the new and ambitious regulatory framework is very demanding, the European legislator took care to mitigate surprises in its application by the different Member States, foreseeing, in a wise and prudential way, its gradual entry into force, thus creating effective conditions so that internal procedures can be adjusted to the requirements brought about by the new regulatory environment and, in this way, reducing the risk of non-compliance and the inherent financial penalties and other administrative sanctions that, as a rule, the they are associated.
The first pillar stands out, as we have already mentioned, due to its relevance, the creation of the Authority to Combat Money Laundering and the Financing of Terrorism (ACBC), which constitutes, in the first line , as a relevant response to the cross-border nature of the crime and the product associated with it, aiming to mitigate the risks of ineffectiveness of the multiple efforts developed by Member States for PBC/CFT, within the broader framework of the functioning of the Union financial system.
The emergence of ACBC constitutes, in fact, the best proof of the EU’s own recognition of the need to adopt a holistic and harmonized approach to the multiple and, often, uncoordinated efforts that different Member States have been developing in the context of PBC/CFT.
The creation of an entity with the nature, configuration and mandate of ACBC can, decisively, constitute the collaborative and informed “glue†that was missing for greater effectiveness in the fight against ML/FT, linking , systematizing and harmonizing the multiple strategies and approaches that have been put into practice in different Member States and, thus, contributing to a desirable and effective application of harmonized rules in this field.
To this extent, the enthusiasm and, above all, the high expectations that the EU places on the creation of this new entity are justified, as it is expected that it will be able to ensure efficient and adequate supervision of the entities entities that pose a high risk with respect to ML/FT, in strengthening common supervisory approaches for all other non-selected obliged entities and in greater (and more desirable) facilitation in the process of carrying out joint analyzes and the cooperation exercises promoted between the different Financial Information Units (FIU). In addition, and for supervision in matters of ML/FT to reach an efficient and uniform level throughout the Union, it is critical that the ACBC can exercise, effectively and effectively, its supervisory powers. o directly from a certain number of obliged entities selected from the financial sector, including cryptoactive service providers and proceeding, in this context, either to monitoring, analyzing and exchanging information on ML/CB risks FT that prove likely to affect the internal market, either the coordination and supervision of supervisors in matters of PBC/CFT in the financial and non-financial sector, which naturally should include bodies of self-regulation and coordination and support of the FIUs.
Among other tasks that ACBC will carry out, we highlight those that must be developed in collaboration with national supervisory authorities and, as well as periodic assessments of credit institutions. said and financial institutions operating in at least six Member States. Added to all this is the fundamental role that ACBC will ensure in issuing guidelines relating to its operations, as well as the power to issue binding decisions addressed to obliged entities, selected individually and, not the least relevant, the power that is still granted to impose administrative and pecuniary sanctions in cases where non-compliance occurs.
For the success of its mission, it will also be relevant to highlight the possibility that ACBC, the European Public Prosecutor’s Office, Europol, Eurojust and OLAF can exchange strategic information and other information not operational, such as typologies and risk indicators, in the areas of its competence.
In a more instrumental way, but complementary to the role reserved for ACBC, we must pay attention to the second pillar, implemented by the Regulation (EU) 2024/1624, also of the European Parliament and of the Council, of May 31, 2024), which will come into force 21 days after publication and which will be applicable from 10 July 2027, with the exception of football agents and some football operations professional football clubs, as happens, for example, with operations carried out with an investor or a sponsor, to which it should only be applicable from July 10, 2029.
This emerging concern with the transactional vicissitudes operated in the world of football is, in fact, aligned with the clear perception that we all have, that the activities carried out by professional football clubs and Its agents are, after all, among the most exposed to the risks of money laundering and its underlying infractions. This is due to multiple factors that are part of the football universe, such as the global popularity of football, the considerable amounts that are generally involved, the cash flows and financial interests involved, the prevalence of operation cross-border actions and, not infrequently, the existence of property holding structures and modes of operation that reveal high opacity.
In this context, the regulation now approved is based on the unavoidable observation that it is this multitude of factors that expose football to possible abuses by criminals to legitimize illicit funds and, in this way, make the sport vulnerable. susceptible to money laundering and the offenses that underlie it. Among the main areas of risk, and just to give a few examples, are operations with investors and sponsors, including advertising companies, and the transfer of players, which will affect professional football clubs. and on football agents the obligation to put into practice a set of solid and effective measures in the difficult fight against money laundering, and which should include, if necessary, the application due diligence measures relating to clientele, investors or even sponsors. On the other hand, and with the aim of avoiding disproportionate burdens on smaller clubs, which are therefore less exposed to the risk of criminal use, Member States should be able, based on a proven risk of money laundering and underlying crimes, as well as terrorist financing, exempt, in whole or in part, certain professional football clubs from the more demanding requirements set out in the new regulation.
Furthermore, this pillar contains other relevant obligations such as, for example, the one that imposes on institutions to carry out periodic assessments of employees responsible for compliance. of the rules relating to PBC/CFT and, on the other, the obligations imposed on parent companies to adopt PBC/CFT measures and policies at the level of the group itself, which is in fact extendable to subsidiaries that operate in third countries.
On the other hand, outsourcing contracts will also have new rules that will seek to ensure that the obliged institutions comply with the standards relating to PBC/CFT. Due diligence and Know Your Customer (KYC) procedures will also receive greater attention from the new regulation, providing for a set of basic requirements for due diligence in transactions in money and the establishment of cooperation with customers.
It will also be important to provide countermeasures aimed at high-risk third countries, with EU entities obliged to limit commercial relations or transactions with natural persons or legal entities from third countries classified as high risk. Within the framework of this regulation, it will also be important not to forget the cooperation with the Financial Information Unit (UIF), providing that the obliged institutions and the its employees must cooperate with the FIU and report any suspected transactions related to ML/FT, and transactions must be suspended if suspicions are identified that a particular transaction is related to criminal products or terrorist financing activities, situations that must be immediately reported to the FIU.
Closing the package, and completing the new regulatory environment, we also have the important measures brought by Directive (EU) 2024/1640 of the European Parliament and of the Council of 31 May 2024whose main objective is clearly to promote the expansion of the scope of obligations imposed on Member States, above all by encouraging them to implement legal and normative solutions aimed at combating ML/FT.
Interesting, in this regard, is the obligation that falls on Member States to regulate the issuance of golden visas and golden passports and, above all, to adopt reinforced security measures in relation to individuals who request them. To this obligation are added others such as maintaining and publishing statistics on all actions taken in relation to PBC/CFT, maintaining a single and central register of accounts, in which they can be searched information relating to an account identified by an IBAN number, including a virtual IBAN number and also securities and cryptoasset accounts.
As is clear, this new EU regulatory package is only late.
In reality, by significantly expanding the obligations on Member States related to PBC/CFT, the new regulations force Member States to establish new and demanding procedures and to implement internal standards and policies designed to ensure the necessary compliance with the rules now published.
In the midst of so many and impactful changes, which will, we are certain, bring greater effectiveness in preventing and combating ML/TF, I am left with just one doubt: will the Are Member States and the markets themselves really prepared for so many and so relevant regulatory demands?
We will certainly see what the future holds for us, as this, with the concern of many and the ignorance of many others, has already begun a long time ago.
