European Parliament Approves 3rd Anti-Laundering Directive

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Friday, July 1, 2005
Author: 
Bruce Zagaris
Volume: 
21
Issue: 
7
264
Abstract: 
On May 26, 2005, the European Parliament approved the proposed Third Directive on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. The Directive applies to the financial and other key services sectors, as well as covering all providers of goods, when payments are made in cash in excess of ?15,000. Persons and entities subject to the Directive must cooperate in the anti-money laundering and counter-terrorism financial regulatory efforts by taking various measures to "Know Your Client," report suspicious transactions and establish preventive systems with their organizations. On June 7, 2005, at the meeting of ECOFIN in Luxembourg final adoption of the Directive is expected. The Third Anti-Money Laundering Directive builds on existing EU legislation (see IP/04/832), incorporating into EU law the June 2004 revisions of the Forty Recommendations of the Financial Action Task Force (FATF). The Directive applies to the financial sector as well as the gatekeepers, that is, lawyers, notaries, accountants, real estate agents, trust and company service providers. The scope also embraces all providers of goods, when payments are made in cash in excess of ? 15,000. Persons subject to the Directive must identify and verify the identity of their customer and of its beneficial owner, and to monitor their business relationship with the customer; report suspicious transactions of money laundering or terrorist financing to the Financial Intelligence Unit; and take supporting measures, such as ensuring a proper training of the personnel and the establishment of appropriate internal prevention policies and procedures...[more]