Money Laundering

The law of Europe relating to money laundering is governed by EU Secondary Legislation and by specific national legislation in EU and non-EU countries. The primary overall goal of all such legislation, as set forth in EU Directive 2001/97/EC (amending prior Directive 91/308/EEC), is to prevent legitimate financial and credit institutions and establishments from being used by criminals and criminal organisations to circulate, use or hide the proceeds of serious crime (including tax fraud) and to require reports from legitimate persons and entities about such illegal activities.

Financial and credit institutions are very broadly defined to include banks, money changing offices (bureaux de change), money transmission services, insurance companies and investment firms. Other businesses are also regulated, such as notaries, independent legal professionals (outside counsel), auditors, real estate agents, casinos and dealers in high-value goods. Banks are subject to much more stringent and detailed regulations than the others. All are required to identify their customers/clients (and are released from any professional secrecy obligations in this connection) and are required to report "suspicious transactions" involving their customers/clients to specified national authorities.

It is a violation not to report transactions which should have been reported as suspicious. Aiding and abetting money launderers is also prohibited (and often is subject to sanctions more severe than those imposed upon the money launderers themselves) and it is prohibited to disclose to the suspected money launderer that a "suspicious activity" report is about to be, or has been, lodged.

All EU member countries are required to implement national legislation in accordance with Directive 2001/97/EC, no later than 15 June 2003.

Guidance notes in various European countries set forth examples of "suspicious transactions", while recognising the difficulty of devising a uniform and all-inclusive list of "warning signs". Among those included are:

• Clients whose details cannot be verified or who are reluctant to provide

verifiable details

• Clients with no discernible reason for using the services of the

particular financial or credit institution

• Use of apparently unnecessary intermediaries

• Unusually large numbers of cross-border transactions or transfers not

consistent with normal business activity

• Large cash transactions

• Transactions involving unconventional jurisdictions and "offshore"

tax havens

• Payment to third parties who have no apparent connection with the

client or with the proposed transaction

Different countries may apply slightly different concepts of what is large and what is otherwise suspicious.

There are also various international treaties and conventions regarding mutual assistance between signatory countries, such as the 1990 Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (the "Strasbourg Convention"), to which all EU countries are signatories and to which all New EU Accession Countries must adhere. Among other such treaties should be noted the 1988 UN Convention Against Illicit Traffic in Narcotic Drugs & Psychotropic Substances (the "Vienna Convention").

All European countries have laws requiring the confiscation of criminal proceeds or their return to their lawful owners. These are often supplemented by anti-terrorism treaties and legislation (beyond the scope of this Chapter).

There are various levels of fines and other penalties for failure to comply with the mandated reporting requirements and these vary from country to country. For an example from the UK, please see R v. Duff (2002) EWCA 2117 (six months imprisonment for failure by an individual to report suspicious transaction).

The following chart sets forth the national situation, for all EU and for many non-EU countries. As will be seen from the chart, some jurisdictions attempt to gather the relevant law into one place and designate one national reporting authority. Other jurisdictions have a more diversified or decentralised approach. In some jurisdictions, the national legislation is based solely upon Directive 91/308/EEC and in others the national legislation may anticipate provisions of Directive 2001/97/EC.

Interesting Europe-facts: + When Poland joins the EU, it will have as many votes in the European Parliament and the Council of the EU as Spain. Bulgaria will have as many as Austria or Sweden. Romania will have more than the Netherlands or Belgium.

+ The first known copyright in Europe was granted in Venice on 10 January 1491 and the first copyright law was enacted in Venice in 1544. The first known life insurance policy was issued in London on 18 June 1583. The first known employment agency was set up in Paris on 4 July 1631.

Money Laundering continued

Country Legislation Reporting Agency
Austria Banking Law Ministry of the
  Articles 39-41; Interior (EDOK
  Criminal Code Reporting Office)
  Articles 165  
Belgium Penal Code CTIF-CFI (Unit
  Articles 43 505; Processing
  Laws of 11 Financial
  January 1993 Information
  and 7 April pursuant to
  1995 (amended Article 7 of the
  2 August 2002) Law of 11 January
Bulgaria Prevention of Ministry of
  Money Finance (Bureau
  Laundering of Financial
  Act (2 January Intelligence)
CzechRepublic Law 61/1996 of Ministry of
  15 February Finance
  1996 Decree of  
  24 June 1996  
Denmark Act 28 on Money Laundering
  Measures to Secretariat (Public
  Prevent Prosecutor for
  Money Serious Economic
  Laundering (13 Crime) and others
  May 2002)  
Estonia Prevention of Ministry of
  Money Internal Affairs
  Laundering (Financial
  Act (25 Intelligence Unit)
Finland Act on National Bureau
  Preventing of Investigation
  Money (Money
  Laundering (1 Laundering
  March 1998) Clearing House)
  (and various  
  provisions in  
  criminal and  
France Penal Code TRACFIN (Ministry
  Articles 324-1 Unit for
  to 324-9 and Processing
  Monetary Information and
  Financial Code Action against
  Articles Illegal Financial
  L.562-1 to Flows)
  L.563.1 to  
  L.563-6, L.564-1  
  to L.564-3  
  andL.574-1 to  
Germany Money Federal
  Laundering Investigation
  Act 1993; Act Office; Federal
  Against Crime Customs Criminal
  1994; Act Investigation
  Improving the Office; local
  Fight Against police; and others
  Crime 1988;  
  Criminal Code  
  261 (as  
  amended 1  
  January 2003)  
Greece Law 2331 of 24 Financial and
  August 1995; Economic Crimes
  Presidential Office (Committee
  Decree 401/10 of Article 7 of Law
  December 2331/1995)
Hungary Law National Police
  Preventing Headquaters
  Laundering No  
  XXIV of 1994;  
Ireland Criminal Bureau of Fraud
  Justice Act Investigation
Italy Criminal Code Italian Foreign
  Section 648Ws; Exchange Office
  Decree 143 of (UIC/SAR)
  1991; Decree  
  153 of 26 May  
Latvia Law on the Office for  
  Prevention of Preventing  
  Laundering of Laundering of  
  Proceeds Proceeds  
  Derived from Derived from  
  Criminal Criminal Activity  
  Activity (18 (the Disclosures  
  December Office)  
  1997) Office    
  for Preventing    
  Laundering of    
Lithuania Money Ministry of the  
  Laundering Interior  
  Prevention Act (Financial Crime  
  (28 March Investigation  
  2002) and Service) and  
  various others  
  Articles of the    
  Penal Code    
  and specific    
Luxembourg Circular CSSF Surveillance  
  02/78 (as Commission for  
  amended the Financial  
  through 27 Sector  
Netherlands Criminal Code Notification  
  Articles Point Office  
  416-417bis; (special  
  Notification disclosure  
  Act of 16 office)  
  1993, as    
Norway Financial Money  
  Services Act Laundering Unit  
  and (Ministry of  
  Regulations Justice and  
  (with Police)  
  on 1 January    
Poland Criminal Code National Police  
  Article 299; Headquarters  
  Banking Law    
  of 29 August    
  1997, Articles    
Portugal Decree Laws Ministry of  
  15/93 22 Finance;  
  January 1993), Attorney  
  313/93 (15 General;  
  September DCITE-BIB  
  1993) and    
  325/95 (2    
Romania Law N° 21/99, National Office  
  Articles 23-25 for the  
    Prevention and  
    Combat of  
Slovakia Act 249/94, Ministry of the  
  Decree 181/97 Interior  
  and Penal (Financial  
  Code Article Intelligence  
  252 Unit)  
Slovenia Act on the Office for Money  
  Prevention of Laundering  
  Money Prevention  
  Laundering (26    
Spain Law 19/1993 of SEPBLAC  
  28 December (Executive  
  1993; Royal Service of the  
  Decree Commission for  
  925/1995 of 9 the Prevention  
  June 1995; of Money  
  Penal Code Laundering and  
  Articles Financial Crime -  
  301-304 Bank of Spain)  
Sweden Money FIPO (National  
  Laundering Financial  
  Act (1 January Intelligence  
  1994) Service)  
Switzerland Federal Act on Federal Ministry  
  the Prevention of Finance  
  of Money (Control  
  Laundering (10 Authority);  
  October 1997); Federal Ministry  
  Swiss Criminal of Justice  
  Code Section (Reporting  
  305 Office);  
United Kingdom Proceeds of NCIS (National  
  Crime Act Criminal  
  2002; Money Intelligence  
  Laundering Service)  
  2003 (pending)    

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