Council of Bars and Law Societies of Europe (CCBE) in its latest newsletter gives an update on European anti money-laundering (AML) developments, including the opinion by the European Data Protection Supervisor (EDPS) on the processing of personal data under AMLD4 (the register of beneficial owners):
Amendments to the 4th AML Directive
On 28 February, the responsible European Parliament Committees adopted a Report on the proposal for a Directive amending the 4th anti-money laundering Directive. Discussions have now commenced with the Commission and Council (Member States) in order to find a compromise. A number of the draft proposed provisions in their current form will impact on lawyers, including issues regarding customer due diligence requirements, beneficial ownership provisions, the role of the self-regulatory body, the role and activities of Financial Intelligence Units and tax advice provided by lawyers.
In February, the European Data Protection Supervisor (EDPS) issued an Opinion which analysed certain provisions of the proposed amendments to the 4th AML Directive. The EDPS is an independent institution of the EU which, with regard to the specific point of processing personal data, “is responsible for ensuring that the fundamental rights and freedoms of natural persons, and in particular their right to privacy, are respected by the Community institutions and bodies”. In its Opinion, the EDPS identifies a number of significant concerns relating to Beneficial Ownership provisions. The Opinion also identifies concerns regarding proportionality issues with respect to the role of Financial Intelligence Units, and proportionality concerns regarding the need to depart from the well-established risk-based approach. This Opinion also refers to concerns regarding the fact that the proposed amendments exceed the stated goal of countering money laundering and terrorist financing, and violate the principle of purpose limitation of gathering personal data. The CCBE shares the concerns of the EDPS and has expressed similar concerns.
Supra National Risk Assessments
The Commission is continuing its work on Supra-National Risk Assessments (SNRA). This involves assessing the level of “threat and risk” of money laundering and then assessing the “mitigating measures” for a number of sectors, including the legal sector. The CCBE participated in a second Commission consultation on 14 March. It is expected that the Commission will prepare its Recommendation by June 2017.
Commission proposal on countering money laundering by criminal law
On 23 December, the Commission published a “Proposal for a Directive of the European Parliament and of the Council on countering money laundering by criminal law.” The CCBE believes there are many problems with this proposal, ranging from the definition of “criminal activity”, provisions regarding the “acquisition, possession or use”, implications for the presumption of innocence, “self- money laundering” provisions, as well as provisions concerning” Property derived from criminal activity”. The CCBE prepared a response to this proposal which was approved at the Standing Committee on 31 March, and will be submitted to the EU institutions.
FATF Private Sector Consultative Meeting
The CCBE participated in a FATF organised Private Sector Consultative Meeting in Vienna on 20 and 21 March. The meeting covered a range of issues including beneficial ownership, trusts and future work with the private sector.