In the resolution the European Parliament adopted on 10 July 2020 the Parliament shows a complete disregard for European companies that have to comply with the inoperable, complicated and fast changing European anti-money laundering (AML) & anti-terrorist financing (CTF) legislation.

In this resolution the members of Parliament show no interest in the fact that the ‘obliged entities’ of the AML and CTF-legislation represent a large variety of companies, with major differences in information position and mostly not equipped for complying with complicated, quickly changing and fragmented rules. The proposed harmonization of AML/CTF legislation will not make their position better. The bleak future is that legislation made for banks will be further imposed on all other obliged entities, even on SME’s without legal knowledge.

In tough anti-crime language the Parliament speaks out against villains and crooks and criticizes EU-member states. My impression is that the Parliament is too optimistic about the possibilities for member states to implement this European legislation. It shows the growing power of Europe in the domain of financial law.

The risks of profiling |SyRI
In the meantime dangers for citizens (including companies and organisations) are increasing. Among these dangers are the profiling practices that are obligatory under AML/CTF law for companies (like banks) that have to provide assistance to the prosecution authorities. The same type of profiling practices were used by the Dutch government and were banned by court in the ‘SyRI’ case. Recently profiling systems by the Dutch tax authority were halted because of illegal discrimination. It shows the necessity of carefully following what Europe is thinking up.

More information:

European Parliament:

• MEPs set out new measures to stop money laundering, press release European Parliament, 10 July 2020.
• Resolution by the EP, A comprehensive Union policy on preventing money laundering and terrorist financing – the Commission’s Action plan and other recent developments, announcement, resolution in pdf, resolution as a word file, 10 July 2020.
• Action Plan AML/CTF by the European Commission, subject of the Parliament’s discussions in July 2020.

On risk profiling and the SyRI scandal in the Netherlands:

• SyRI legislation in breach of European Convention on Human Rights, announcement by the Court of the Hague. From the announcement: “The Hague District Court has delivered a judgment today in a case about the Systeem Risico Indicatie, or SyRI. SyRI is a legal instrument used by the Dutch government to detect various forms of fraud, including social benefits, allowances, and taxes fraud. The court has ruled that the legislation regulating the use of SyRI violates higher law. The court has decided that this legislation does not comply with Article 8 of the European Convention on Human Rights (ECHR), which protects the right to respect for private and family life, home and correspondence.“

Many articles were written on SyRI, e.g.:

• Tijmen Wisman for the Digital Freedom Fund, The SyRI Victory: Holding Profiling Practices to Account;
• Asser Institute, [Interview]: Curtailing the surveillance state? Anticipating the SyRI case judgment;
• TechCrunch, Blackbox welfare fraud detection system breaches human rights, Dutch court rules;
• Algorithm Watch, How Dutch activists got an invasive fraud detection algorithm banned;
• Sanne Blauw for The Correspondent, An algorithm was taken to court – and it lost (which is great news for the welfare state);
• The Guardian, Welfare surveillance system violates human rights, Dutch court rules.

Recently the Dutch tax authorities closed several other profiling systems, that now are under investigation, read for instance:

• Investigation launched into ethnic profiling at a Dutch tax authority: report.
• Tax office accused of heavy-handed approach to suspected income tax fraud.
• In Dutch: Fiscus zet onwettige fraudesystemen uit, NRC.

Further on this blog:

• Europe discusses money laundering and forgets about human rights, earlier post on the discussions in Parliament.
• Article on the Action Plan by the Commission: Is a disaster necessary to stop the European AML-CFT tanker? | Action Plan AML-CFT.
• All articles (mostly in Dutch) on the Anti-Money Laundering Regulation that is coming; on the European AML/CTF directives; on financial human rights and on risk profiling.