H.M. TREASURY NEWS RELEASE

HM Treasury News Release

161/99

5 October 1999

UK CALLS FOR TOUGHER EU ACTION AGAINST MONEY LAUNDERING

Economic Secretary Melanie Johnson today welcomed the European Commission's proposal for an up-to-date directive on Money Laundering. She said:

"Money laundering is a very serious offence, with the capacity to undermine financial markets and to corrupt professional advisers. While police forces and regulators respect national borders, criminals do not. We therefore support a pan-European approach to crack down on the illicit profits of all serious crime as part of a wider agenda to enforce anti-money laundering standards world-wide."

The European Commission's Second Money Laundering Directive aims to strengthen existing rules for financial institutions and other business across the EU in the fight against serious crime. It would extend the current regulations to a wider range of underlying offences, bringing Europe as a whole closer to the UK approach. It also extends the obligation to maintain effective anti-money laundering systems to professionals - such as lawyers and accountants.

Commenting on these proposals, Melanie Johnson said:

"The UK will push for a tough directive to bring Europe more into line with the UK. The Commission's proposals are an excellent starting point. But in some areas they do not go far enough. We want to see the scope of the directive extended to the proceeds of all serious crimes. And we will work with other member states to ensure that - where money laundering is involved - financial sector professionals cannot hide behind excessive professional secrecy.

"We also welcome this because the new proposal would oblige Member States to combat laundering of the proceeds of organised crime and fraud against the budget of the EU. The 1991 directive applies only to the proceeds of drugs offences.

"We shall be considering the directive carefully over the coming months, and welcome the views of interested parties. We will pay close attention to ensuring that the costs of compliance do not exceed the likely benefits. And we shall be working closely with our European partners to close down opportunities currently exploited by criminals. We will fight to ensure that Europe's financial markets offer no sanctuary to dirty money."

Notes to Editors

HM Treasury, in conjunction with the Home Office, has lead responsibility for ensuring that the UK has adequate controls to combat money laundering. The Treasury also has lead responsibility for ensuring that EU-wide financial regulations support the single market in financial services.

The European Commission published the draft second money laundering directive on 14 July 1999. It would update the 1991 directive, which was transposed into UK law through the Money Laundering Regulations 1993. The Economic Secretary Melanie Johnson has today deposited an Explanatory Memorandum on the new draft directive before the European scrutiny committees of the UK Parliament. A copy of this is available on the HM Treasury website at www.hm-treasury.gov.uk. Information about the Commission's proposals is available at http://europa.eu.int/comm/dg15/en/finances/general/99-498.htm

In the UK it is an offence to launder the proceeds of any indictable offence.

The new proposal would also extend the coverage of the current directive (limited to the financial sector) to a series of non-financial activities and professions which the Commission has identified as being vulnerable to misuse by money launderers. Requirements to identify customers, keep proper records, report suspicious transactions and train relevant staff would therefore be extended to external accountants and auditors, real estate agents, notaries and lawyers carrying on financial transactions, dealers in precious stones and metals, transporters of funds and casinos. In the case of lawyers, the Commission propose to allow member states to permit lawyers to report suspicious transactions to their professional organisation rather than to the police.

HM Treasury has already begun the process of consultation with representatives of the affected groups. We would welcome comments on the draft directive from any interested party by 1 December 1999. These should be sent to:

Financial Crime Branch
Room 35a/g
HM Treasury
London SW1P 3AG

or e-mailed to:

fincrime.branch@hm-treasury.gov.uk

6. Media Enquiries should be addressed to Charles Keseru in the HM Treasury Press office on 020 7270 4420.