EC to hit terrorism in its digital wallet
The European Commission (EC) has presented an action plan to fight the financing of terrorism, including targeted amendments to the Fourth Anti-Money Laundering Directive (AMLD) that was implemented in May 2015.
These include an amendment to include a list of all compulsory checks financial institutions should carry out on financial flows from countries having strategic deficiencies in their national anti-money laundering and terrorist financing regime; enhancing the powers of EU Financial Intelligence Units and facilitating their cooperation; introducing centralised national bank and payment account registers or central data retrieval systems in all member states; tackling terrorist financing risks linked to virtual currencies; and tackling risks linked to anonymous pre-paid instruments.
To prevent the abuse of digital currencies for money laundering and terrorist financing purposes, the EC is proposing to bring virtual currency exchange platforms under the scope of the AMLD, so that these platforms have to apply customer due diligence controls when exchanging virtual for real currencies, ending the anonymity associated with such exchanges.
For prepaid instruments the EC is proposing to lower thresholds for identification and widening customer verification requirements. Due account will be taken of proportionality, in particular with regard to the use of these cards by financially vulnerable citizens.
Other measures will include a comprehensive common definition of money laundering offences and sanctions across the EU in order to avoid obstacles to cross-border judicial and police cooperation to tackle money laundering, and an exploration of the need for a complementary EU system for tracking terrorist financing, for example to cover intra-EU payments which are not captured by the EU-US Terrorism Financing Tracking Programme (TFTP).
The recent terrorist attacks in the European Union and beyond demonstrate the need for a strong coordinated European response to combatting terrorism. The European Agenda for Security had identified a number of areas to improve the fight against terrorist financing. Today’s comprehensive Action Plan will deliver a strong and swift response to the current challenges, building on existing EU rules and complementing them where necessary. Through concrete measures, it will adapt or propose additional rules to deal with new threats.
Vice-President Valdis Dombrovskis, in charge of the Euro and Social Dialogue, said, “We want to improve the oversight of the many financial means used by terrorists, from cash and cultural artefacts to virtual currencies and anonymous pre-paid cards, while avoiding unnecessary obstacles to the functioning of payments and financial markets for ordinary, law-abiding citizens.”
Reported by Dan Barnes