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Live: EP to debate and vote on anti-money laundering rules in the EU

Others Article - Economic and monetary affairs10-03-2014 - 17:35
 
Reports of suspicious transactions (provided by banks, currency exchange bureaus, other institutions) in EU countries in 2008-2010 (Source: Eurostat, 2013). Cover photo ©BELGA/EASYFOTOSTOCK/G.S.Popescu

Money laundering accounted for 2.7% of the world's GDP (an astonishing $1.6 trillion) in 2009, according to the UN. New technologies have made it even easier for criminals such as drug dealers, financial schemers and counterfeiters to launder their dirty money. MEPs will debate and vote on tougher rules to tackle money laundering, requiring companies to provide more accurate information about real owners, on 11 March. Follow it live on our website.


Definition


Money laundering is the process of disguising the illegal origin of the assets (usually cash) so that it cannot be linked to a crime (e.g., trafficking in drugs, arms and human beings, theft, extortion, corruption etc.).


How it works


Criminals have many ways of concealing dirty money, but usually it consists of three stages:


1. Placement

2. Layering

3. Integration

Deposit dirty money into a bank account. Examples: splitting cash up in smaller sums for easier transportation abroad; switching it into gold bars or cheques

Conceal the illegal origin of the funds. Examples: wire transfers; splitting between bank accounts, countries, individuals, companies

Create an apparent legal origin for the funds which then re-enter the normal economic circuit. Examples: creating fictitious contracts, invoices, loans; fabricating casino winnings; disguising the ownership of assets

Source: OECD

 

Common techniques:


  • Fictitious invoices: invoices are issued for fictitious services or for less than the value declared. This enables a company to justify the amounts it has in its bank accounts, making them legitimate.
  • Front companies: In order to "pre-wash" illicit funds, bank deposits are made through shell companies (which exist on paper only) or businesses (also known as front companies) that are directly or indirectly linked to a criminal organisation.

To find out more about the fight against organised crime in the EU, click here for our overview of related stories.


New rules will ensure more transparency and a better overview of financial transactions, making it harder to set up fake companies and transfer dirty money from one account to another.


The debate on Tuesday morning and the vote at noon CET can be followed live on our website by clicking on the link on the right. Negotiations with the Council and the European Commission are likely to start when Italy takes over the presidency of the Council in the second part of the year.

REF. : 20140218STO36348