Current and future European Commission AML/CFT activities

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1 Current and future European Commission AML/CFT activities Henny Bakker Coordinator FIU-NL Team Counter Terrorism & Proliferation Financing Financial Intelligence Unit- The Netherlands

2 SUBJECTS AML/CFT and Proliferation Financing (PF) New EU Payment systems

3 AML Third EU AML/CFT Directive FIU Platform Trends EU regulators

4 THIRD EU AML/CFT DIRECTIVE Identification high risk transactions and UBOs Extra attention on PEPs Detailed Customer Due Diligence Introducing traders in goods as reporting entities (threshold cash payments EUR ) EGMONT annual report 2010: EUROPE REGION The third European Union AML-CFT directive is an important change for European countries, as it brings European legislation up to date with international requirements. In the revision of transposition of the 3rd European Union AML-CFT directive by the European Commission in January 2010, only two (2) countries had not implemented the directive, while two (2) others have done it partially.

5 FIU PLATFORM Informal group set up by the EU Commission Facilitate cooperation and exchange information among FIUs EU Member States Identify problems and good practices in framework of the implementation of the third EU AML/CFT Directive EU Services participate and support Platform

6 TRENDS EU REGULATORS Euro crisis show difficulties for National Banks to oversee the total picture (Iceland) Banks operate in different jurisdictions EU regulations create Single European Payment Area (SEPA) Regulators can only act nationally

7 CFT Counter Terrorism Terrorist Finance Tracking Program (TFTP) Terrorist Finance Tracking System (TFTS) Proliferation Financing

8 TERRORIST FINANCE TRACKING SYSTEM (TFTS) EU-US agreement US demands bulk data with nexus to terrorism Nexus to terrorism checked by Europol OK Europol SWIFT sends data to US EU member states can make a request to US US sends leads via Europol to EU member state US can share leads spontaneously

9 TERRORIST FINANCE TRACKING PROGRAM (TFTP) European Union Commission proposal SWIFT data in EU database Request with nexus to terrorism from US to TFTS data Leads found disseminated to the US Accessible to all EU Member States

10 PROLIFERATION FINANCING (PF) COUNCIL REGULATION (EC) No 1110/2008 ( ) amending Regulation (EC) No 423/2007 concerning restrictive measures against Iran Appointing FIUs as central point of information Reporting obligation of transactions with risk for PF Reporting transactions of named Iranian bank

11 PROLIFERATION FINANCING (PF) Difficult subject for banks Need for expertise Support from FATF PF report FATF rapport Proliferatie Financiering, Add info:

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13 NEW EU PAYMENT SYSTEMS One European payment area Single European Payment Area (SEPA) Payment Service Directive (PSD)

14 SINGLE EUROPEAN PAYMENT AREA (SEPA) Cross-border retail payments Self-regulatory initiative by banking sector (represented in the European Payment Council (EPC)) SEPA not free of costs, European Parliament mandated that banks may only charge the same amount as for domestic transfers

15 SINGLE EUROPEAN PAYMENT AREA (SEPA) OBJECTIVES Standardization of euro payments: equal time limits, equal fraud-risk levels, equal processes, all-electronic straight through processing, no differences between national and international payments in the SEPA area; strengthening trust and reliability on a pan-european basis. Competition in respect to higher number of competitors, fewer niches or special fields or incompatibilities through standardization. Reduction of costs of electronic money and of payment transactions through competition at the side of payment providers and banks both are considered as the biggest losers of the SEPA standardization process at an estimated 40,000,000,000 per year. Reduction of cash money and increase of electronic money through reduction of costs of electronic money. Increasing surveillance of (electronic) money flow particularly regarding money laundering (unofficially also for surveillance of illicit work [10 30% of GDP's], organized crime and taxes).

16 SEPA CONSISTS OF 32 COUNTRIES: the 17 members of European Economic Area(EEA) and EU that are in the Eurozone the 10 members of EEA and EU that are not in the Eurozone, the 3 members of the EEA that are not in the EU: Liechtenstein, Iceland and Norway is not part of the EEA) 1 non EU country that uses the Euro by agreement with the EU, but is not officially part of the Eurozone: Monaco Switzerland Including the following territories that are considered to be part of the EU in accordance with Article 299 of the Treaty of Rome: Martinique, Guadeloupe, French Guiana, Réunion Gibraltar, Azores, Madeira, Canary Islands, Ceuta and Melilla and Åland Islands

17 SINGLE EUROPEAN PAYMENT AREA (SEPA) For credit transfers: SCT SEPA Credit Transfer For direct debits: SDD SEPA Direct Debit. (Banks 2009) For credit cards: SEPA Cards Framework Since 1/2008 banks are migrating customers 2011 SEPA payments will replace all national payments in the Eurozone Info:

18 PAYMENT SERVICE DIRECTIVE (PSD) Level playing field by harmonizing customer protection and the rights/obligations for payment providers Payment service providers (Non banking institutions like money transfer remitters) Info:

19 PSD CONCERNS API registered EU member state A can open offices in all other EU member states Need for leveling regulation and supervision Remitters register in EU member state with the lowest grade of regulation Regulator in EU member state B can not take measures against PSD office, API is registered in EU member state A. Regulator in EU member state A has to take regulative actions against office in EU member state B.

20 CONTACT Henny Bakker FIU-The Netherlands Tel: Mob: