On October 25, the European Commission (Commission) published a roadmap (Roadmap) in relation to its proposal for an EU directive on the criminalization of money laundering. The Roadmap forms part of the Commission’s action plan (Action Plan) against terrorism financing, published in February 2016, and aims to introduce minimum rules for the definition of the criminal offense of money laundering and sanctions.

The Commission notes that there are significant differences between EU Member States as to the definition of money laundering, the predicate offenses and the sanctions to be imposed and that this impedes effective enforcement and deterrence. The Roadmap sets out the context for the initiative, the problems the initiative aims to address and what it aims to achieve and the manner in which the Commission plans to consult on the Proposal. Notably, the Roadmap states that the Commission will consider both non-legislative action (in the form of EU-wide or national guidance in cross-border money laundering cases) and legislative solutions for a more uniform approach to money laundering in the EU. The legislative solution would transpose international standards and treaties into EU law and is further broken down into three options for consideration. These include harmonizing:

  • the definition of money laundering to be in line with the Financial Action Task Force (known as FATF) recommendations, with some discretion left for EU member states for certain matters, such as possession or use of criminal property, self-laundering and attempts and complicity, the scope of predicate offenses of money laundering and appropriate sanctions;
  • in accordance with the Warsaw Convention and affording EU member states less discretion, such as in relation to the criminalization of negligent conduct; or
  • beyond international obligations, by defining conditions and concepts of money laundering offenses and predicate offenses, implementing sanctions thresholds, and implementing rules on information exchange for enforcement purposes.

Money laundering is already a criminal offense in the UK, so the new directive may be of limited impact in the UK—whereas many other EU member states may have to bring significant new laws into effect to transpose the requirements of the directive into their domestic law.

For more information on the Commission’s Action Plan, see the Corporate & Financial Weekly Digest edition of February 12.

The Roadmap is available here.