Report on the assessment of the risks of money laundering and terrorist financing affecting the internal market and relating to cross-border activities

Money laundering and terrorism financing are significant and evolving challenges which need to be addressed at European Union (EU) level. The recent terrorist attacks and recurring financial scandals call for stronger action in this area. In the context of the internal market, financial flows are integrated and cross-border by nature, and money can flow swiftly, if not instantly, from one Member State to another, allowing criminals and terrorists to move funds across countries avoiding detection by authorities.

To address these cross-border phenomena, the EU Anti-Money Laundering/Counter-Terrorism Financing (AML/CFT) framework has defined common rules on the controls and reporting obligations by financial institutions and other economic actors and established a robust framework for EU Financial Intelligence Units (FIUs) to analyse suspicious transactions and cooperate with each other. Despite substantial and steady progress in this area, renewed efforts and additional measures to close any potential gaps are still needed to effectively combat money laundering (ML) and terrorist financing (TF).

This report on the supra-national risk assessment (SNRA) of the risks of ML and TF affecting the internal market and relating to cross-border activities is the first report carried out at a supranational level in the EU. It analyses the risks of ML and TF the EU could face and proposes a comprehensive approach to address them. Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of ML or TF (the Fourth Anti-Money Laundering Directive) requires the Commission to draw up, by 26 June 2017, a report identifying, analysing and evaluating the ML and TF risks at Union level. The publication of this SNRA is also one of the deliverables of the European Security Agenda and the Action Plan on Terrorist Financing.

Having a clear understanding and analysis of ML and TF risks is a pre-requisite before any efficient and adequate policy response can be made. Risk assessment is particularly important for the internal market given that financial flows are integrated and cross-border by nature. This report presents the main risks for the internal market in a wide range of sectors and the horizontal vulnerabilities which can affect such sectors. On this basis, the report presents the mitigating measures that should be pursued at EU and national level to address these risks and puts forward a number of recommendations for the different actors involved in the fight against ML and TF.

While the Commission acknowledges the risks posed by some high-risk third countries, such geographical risk analysis was not part of this first SNRA. This is due to the fact that the analysis of the risks posed by these jurisdictions is currently conducted in the context of a separate process, namely the Commission delegated acts identifying third-country jurisdictions which have strategic deficiencies that pose significant threats to the EU financial system for ML and TF.

• Primary Source

ESO: Strengthened EU rules to tackle money laundering, tax avoidance and terrorism financing enter into force http://www.europeansources.info/record/strengthened-eu-rules-to-tackle-money-laundering-tax-avoidance-and-terrorism-financing-enter-into-force/

EUR-Lex: SWD(2017)241: Commission Staff Working Document accompanying the report http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=SWD:2017:241:FIN

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