EU Commission takes action against three Member States over lack of implementation of AML obligations

Hogan Lovells

Hogan Lovells

The European Commission has referred Austria, Belgium and the Netherlands to the Court of Justice of the European Union for failing to fully implement the fourth Anti-Money Laundering Directive (4AMLD) into national law.

What has happened?

The European Commission has asked for financial sanctions against Austria, Belgium and the Netherlands after it concluded that they had not fully transposed the 4AMLD into national law, following an assessment of the notified measures by the three Member States.

What does this mean?

The incomplete implementation concerns key aspects of the AML framework, such as mechanisms under which the Financial Intelligence Units (FIUs) exchange documents and information (Belgium), betting and gambling legislation (Austria), and the information to be provided on the beneficial ownership of corporate and other legal entities (the Netherlands).

The deadline by which all Member States had to implement the Directive was 26 June 2017. After the deadline passed, the European Commission opened infringement proceedings against all Member States as none had notified complete transposition of the Directive.

There are open infringement procedures against eight Member States: Denmark, Italy and the Czech Republic have received reasoned opinions, proceedings against two are pending before the court and in this latest decision the Commission has referred three to the court.

Luxembourg, Slovakia and Slovenia have also received letters of formal notice for incorrectly transposing 4AMLD, especially fundamental aspects of the AML framework, such as the exchange of information among FIUs (Luxembourg), the protection of whistleblowers (Slovakia), and the need to adopt measures preventing convicted people from holding management functions (Slovenia).

If these countries do not send a satisfactory response within two months, the Commission may decide to send a reasoned opinion.

Executive vice-president Valdis Dombrovskis said:

“We have robust EU rules in place but they must be applied consistently and efficiently. We will make sure that everyone in both private and public sectors applies the rules rigorously. We have launched many infringement procedures to ensure the full transposition and application of our rules.”

Hogan Lovells partner Aline Doussin said:

"These developments show a strong signal from the EU Commission to address the fragmentation of the EU AML/CTF legislative framework across the EU, and a few months after the deadline for full transposition of the 5th AML directive passed. It should be read alongside its recent Action plan for a comprehensive Union policy on preventing money laundering and terrorism financing, which signals that the EU wants to do more, and have more powers on EU AML/CTF laws across the continent. One might expect in the next few years a proposal for an EU-wide Regulation to unify the EU framework, with the creation of an EU anti-money laundering supervisory body."

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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