The European Union has instituted new rules designed to make it tougher for terrorist groups and criminal organizations to hide their money by moving it into European countries. Known as the “fourth anti-money laundering directive,” the new rules will make it more difficult for these kinds of illicit groups to hide their money via complex tax structures. The new rules also make it much easier for authorities from different EU member states to work together to collaboratively conduct transnational investigations and set much tougher due diligence requirements for accountants, lawyers, and banks.
To comply with the new rules, companies were required to create a national registry of beneficial ownership detailing the actual beneficial ownership of companies. This would make it easy for agencies like Europol to track down funds while also making it harder for illicit groups to obscure their financial assets and holdings.
However, not all EU member states have been quick to sign up for these new rules. While the directive was supposed to go into full effect across Europe on June 26, as of late July, 17 EU member states had yet to put these new rules in place, despite the fact they’ve had more than two years to do so.
Vera Jourova, the EU justice commissioner, sent letters to 14 of these countries last month in response to concern that the countries in question have failed to actually put the rules on their national statute books. She sent letters to an additional 3 countries that have reportedly only partially implemented the rules to date.
Jourva has made it clear that this lack of compliance is unacceptable, particularly given that the EU has made cracking down on illegal financing a major priority in the wake of several high-profile terrorist attacks across the UK, France, and Germany. The hope is that by cutting off funding to these kinds of groups, it will make it more difficult for them to coordinate and carry out attacks.
“This directive equips us much better. It sets safeguards regarding financial flows from high-risk third countries, it deals with modern risks such as pre-paid card payments and operations in virtual currencies,” Jourova explained. “I now expect swift action from the member states concerned to fix this. I hope this is just a small hiccup, not a sign of serious foot-dragging.”
The rules were reportedly applied to meet the deadline in France, the UK, Italy, Germany, Spain, Sweden, Slovenia, Belgium, Austria, the Czech Republic, and Croatia.