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Article EU: New Rules Proposed to Curb Financing of Terrorism and Organized Crime

(Jan. 11, 2017) On December 21, 2016, the European Commission adopted several measures designed to fight terrorist financing and organized crime.  The measures, designed to create a strong, coordinated response to the issue of terrorist financing, result from the action plan against the financing of terrorism adopted in February 2016.  These proposals would be a step toward the creation of a Security Union for the EU.  (Press Release, European Commission, Security Union: Commission Adopts Stronger Rules to Fight Terrorism Financing (Dec. 21, 2016), EUROPA; Press Release, European Commission, Commission Presents Action Plan to Strengthen the Fight Against Terrorist Financing (Feb. 2, 2016), EUROPA.)

The focus of the measures is on improving the legal framework in three areas – money laundering, illicit cash movement, and freezing and confiscating assets – through three proposed pieces of legislation.  (Security Union: Commission Adopts Stronger Rules to Fight Terrorism Financing, supra.)

Money Laundering

In order to make sure that money laundering is treated as a crime, the Commission proposed that a new EU directive on the subject be created.  It would provide authorities in the EU nations with adequate law to prosecute money laundering activities, whether conducted by terrorists or other criminals.  Aspects of the directive would:

  • establish minimum rules on the definition of money laundering offenses and their punishment, so that differences between countries’ laws cannot be exploited by criminals;
  • remove barriers to cooperation by the police and judiciary across national borders through the creation of common provisions on investigation of money laundering; and
  • meet the EU’s international obligations established in the Council of Europe Warsaw Convention and the recommendations of the Financial Action Task Force (FATF). (Security Union: Commission Adopts Stronger Rules to Fight Terrorism Financing, supra.) (FATF is “an inter-governmental body established in 1989 … to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system,” Who We Are, FATF website (last visited Jan. 6, 2017); Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism (Warsaw), 2005, Council of Europe website.)

 Controlling Large Cash Flows

The Commission proposed a new regulation on cash controls to:

  • increase restrictions on individuals coming into or exiting the EU with cash amounts above €10,000 (about US$10,435);
  • in cases in which criminal activity is suspected, make it possible for the authorities to take steps when the amount of cash is lower than €10,000;
  • improve the exchange of information throughout the EU; and
  • impose customs reviews on prepaid credit cards and on postal parcels or freight shipments of cash or precious commodities like gold. (Security Union: Commission Adopts Stronger Rules to Fight Terrorism Financing, supra.)

Assets of Terrorists

The Commission also proposed a regulation on mutual recognition of confiscation orders and asset freezing, which will:

  • create a single legal instrument covering both the freezing and confiscation orders across borders within the EU, making the currently applicable legal framework simpler;
  • broaden current cross-border recognition rules so that they apply to confiscations from individuals connected to the primary criminals and make them applicable even if that primary criminal has escaped or died;
  • increase the speed and efficiency of orders to freeze or confiscate assets through the use of a standardized document and with a requirement that competent authorities communicate with each other;
  • include clear, shortened deadlines in the rules for freezing assets; and
  • respect the right of victims to receive compensation, giving those rights priority over the interests of the state in cross-border cases. (Id.)

Comments on EU Policies to Combat Criminal Financing

According to one news report, it is easy to transfer money to the Islamic State (IS, also called ISIL or ISIS) in Europe, because a bank controlled by IS is still part of the private, cooperative, international banking system known as SWIFT.  Fabio De Masi, a member of the EU Parliament, argued that “[i]t is scandalous that banks under the control of ‘IS’ still have access to the international SWIFT system.”  (Bernd Riegert, European Commission Tackles Terrorism Financing, DW (Dec. 21, 2016).)

The new regulations and directive are designed to help address weaknesses in the system to fight money laundering and close loopholes. (Id.) One member of the team that prepared the proposals said that through them

we [will] strengthen our legal means to disrupt and cut off the financial sources of criminals and terrorists. We must ensure we have the right tools in place to detect and stop suspicious financial flows and to support better cooperation between law enforcement authorities so that we can better protect the security of European citizens.  (Security Union: Commission Adopts Stronger Rules to Fight Terrorism Financing, supra.)

 

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Chicago citation style:

Johnson, Constance. EU: New Rules Proposed to Curb Financing of Terrorism and Organized Crime. 2017. Web Page. https://www.loc.gov/item/global-legal-monitor/2017-01-11/eu-new-rules-proposed-to-curb-financing-of-terrorism-and-organized-crime/.

APA citation style:

Johnson, C. (2017) EU: New Rules Proposed to Curb Financing of Terrorism and Organized Crime. [Web Page] Retrieved from the Library of Congress, https://www.loc.gov/item/global-legal-monitor/2017-01-11/eu-new-rules-proposed-to-curb-financing-of-terrorism-and-organized-crime/.

MLA citation style:

Johnson, Constance. EU: New Rules Proposed to Curb Financing of Terrorism and Organized Crime. 2017. Web Page. Retrieved from the Library of Congress, <www.loc.gov/item/global-legal-monitor/2017-01-11/eu-new-rules-proposed-to-curb-financing-of-terrorism-and-organized-crime/>.