MODULE CONTENTS
This module traces the development of anti-money laundering and combating the financing of terrorism (AML/CFT) legislation, starting with the creation of the FATF in 1989 and the first European directive in 1991. It explains how legislation has evolved to adapt to new forms of crime, with the addition of cybercrime, tax offences and the criminal liability of legal persons in the 6th Directive. The module highlights the importance of keeping abreast of legislative changes to ensure compliance.
LEARNING OBJECTIVES
Understand the history and evolution of European AML/CFT directives Identify the main changes introduced by the various European directives Familiarize yourself with the 6th Directive and its new measures, such as the extension of offences and the criminal liability of legal persons Learn to recognize the legal obligations of companies subject to LCB-FT Understand the role of the FATF and the importance of harmonized legislation within the European Union
The Evolution of AML/CFT Regulations: Towards a Reinforced Fight Against Money Laundering
The fight against money laundering and the financing of terrorism (AML/CFT) has evolved since the creation of the Financial Action Task Force (FATF) in 1989. Through several European directives, legislation has adapted to the new methods used by criminals and strengthened the obligations of companies and financial institutions. The first European directive, adopted in 1991, laid the foundations for the fight against money laundering, while subsequent directives added measures against the financing of terrorism and introduced a graduated approach to risk.
The 4th Directive, in 2015, marked a turning point by imposing more stringent obligations, including KYC (know-your-customer) measures and mandatory reporting of suspicious transactions to financial intelligence units, such as Tracfin in France. In response to the increase in terrorist attacks in Europe, the 5th Directive, which came into force in 2018, stepped up vigilance on e-money and high-risk countries, while expanding the scope of professions covered by LCB-FT.
The 6th Directive, to be implemented in 2021, represents a major step forward. It harmonizes the definition of money laundering on a European scale, incorporates cybercrime as a predicate offence, and strengthens the criminal liability of legal entities, making it possible to punish companies that fail to prevent their directors from carrying out illegal activities. The directive also imposes tougher penalties, with a minimum prison sentence of four years for money-laundering offences.
Last but not least, the European Commission is working on a European regulation to harmonize rules across member states, and a new European supervisory authority, AMLA, will be set up to oversee the application of these rules.
AML/CFT legislation is constantly evolving to keep pace with new forms of financial crime. It is essential for companies to keep abreast of legislative changes to ensure compliance and avoid sanctions.
