05 Nov, 2012

2nd EU AML Directive

Categories: Uncategorized

2nd AMLD 2001, Transposing Jun 2003: Collaboration with the FATF

The European Union amended the 2nd Directive and updated the 1st Directive on the prevention of the use of the financial system for the purpose of money laundering. The aim of the 2nd Directive was to refine the existing provisions and to plug the gaps in the legislation highlighted by the 40 Recommendations, suggested by FATF.

The EC felt this was a necessary step to take as the 1st Directive did not adequately establish which Member State’s authorities should receive details of suspicious transactions where the credit or financial institution had branches in various jurisdictions. It adopted a broader definition of money laundering, taking into account underlying offences such as corruption and thus expanding the predicate offences. The 2nd Directive also clarified that currency exchange offices, money transmitters and investment firms were included within the scope of the directive as they were susceptible to money laundering transactions. In addition, it added the authority to identify, trace, freeze, seize and confiscate any property and proceeds linked to criminal activities.

The 2nd Directive touched upon the possibility of the Directive becoming applicable to lawyers participating in financial or corporate transactions. The proposition to extend the provisions of the Directive to the legal profession was met with fierce opposition by the European Parliament. It was due to fears that it would encroach on client confidentiality rules and could potentially violate the integrity of court proceedings. Ultimately, the 2nd Directive was not extended to cover professionals, such as lawyers. Thus, lawyers were exempt from reporting information received in the course of defending or representing a client.

For more information on the EU AML Directives and how they can affect you and your business, please contact us on [email protected]