Strasbourg round-up: Information accompanying transfers of funds report

The information accompanying transfer of funds report steps up the fight against money laundering while protection individual data, say Kleva Kekus and Timothy Kirkhope.

By Kleva Kekus

14 Mar 2014

Kleva Kekus is parliament's co-rapporteur on the information accompanying transfers of funds

With the change in international standards, one year ago the European parliament received a package of the European commission's proposals to update and improve our European legislation to better combat money laundering. In times where changes to the technology and means available to criminals are constantly evolving, I find it crucial that our legislation also follows these changing realities.

The updated regulation received a wide majority in parliament's vote and I trust that we have in-front of us a piece of legislation which will enhance the transparency of fund transfers of all types, both domestic and cross border. This update will make it easier for law enforcement authorities to track funds transferred by criminals and terrorists. The new rules will not only help in identifying the payee but also the beneficiary of the laundered money.

"We need a coordinated response from law enforcement bodies in the member states as well as a standardised procedure for financial institutions and payment service providers"

The new regulation places increased focus on the effectiveness of regimes to counter money laundering and terrorist financing while bringing greater clarity and rule consistency across the member states. Additionally, it broadens the scope designed to address new threats. I am also happy to say that because of the engagement of the parliament, the regulation now better ensures compliance with European data protection requirements and thus guarantees all safeguards for protecting individual rights to personal data and will be concretely applied.

But what remains crucial in ensuring the fight against money launderers is effective is the work on enforcement and implementation of new rules. To effectively combat this problem we simultaneously need two things. We need a coordinated response from law enforcement bodies in the member states, as well as a standardised procedure for financial institutions and payment service providers. The new rules are now based around a risk-based approach, which should strengthen the capabilities and roles of payment service providers in identifying those transfers that 'smell fishy'.

In conclusion, with the danger of money laundering and illicit financial flows being closely interlinked with the problems of tax evasion and tax havens, I trust that this update represents one piece in the bigger picture of eliminating the scandalous tax gap.


Timothy Kirkhope is parliament's co-rapporteur on the information accompanying transfers of funds

The regulation on the transfer of funds is the little sister of the fourth anti-money laundering (AML) directive. It may not have created the same waves as its sibling, but it is integral to the functioning of the new AML regime. This is about tracking funds, and it's done by placing certain requirements on the information that accompanies them. The higher the amount and the higher the risk of irregularity, the more checks and controls we should have in place.

We can compare our approach to aviation. Flights within the Schengen area carry fewer checks for passengers than flights coming from outside which warrant more scrutiny. Coupled with that, we're also introducing the risk-based approach, which is set out in the directive. In essence, the changes set out in this package mean that we are giving our law enforcement bodies more tools to spot anomalies within our financial system. The financial action task force standards act as guidelines, therefore much of our work should follow on from them. It's important that we do not try to reinvent the wheel. The commission proposal, in my opinion, was successful in its transposition of the recommendations.

"In order to respect the rights of individuals it is necessary to ensure that data subjects are properly informed and are granted their data protection rights"

Nevertheless, a number of areas were of interest to MEPs, thresholds, for example. It is my opinion that the €1000 threshold which is currently in force should remain as part of these proposals, but flexibility is built in to make sure that transfers below this level which look suspicious can also be subjected to greater scrutiny.

We also tabled various amendments that aim to bolster data protection within the proposed regulation. It impacts on the relationships between the service provider and the customer, and the collection of personal data for anti-money laundering purposes takes place at the same time as the collection of data for commercial purposes. In order to respect the rights of individuals it is necessary to ensure that data subjects are properly informed and are granted their data protection rights. Both my co-rapporteur Kleva Kekus and I believe we've made good progress on this report together, and I'm glad that it has been adopted smoothly.

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