MOTION FOR A RESOLUTION on a comprehensive Union policy on preventing money laundering and terrorist financing – the Commission’s Action Plan and other recent developments

1.7.2020 - (2020/2686(RSP))

to wind up the debate on the statements by the Council and the Commission
pursuant to Rule 132(2) of the Rules of Procedure

Gunnar Beck, Hélène Laporte, Herve Juvin, Marco Zanni
on behalf of the ID Group

B9‑0206/2020

European Parliament resolution on a comprehensive Union policy on preventing money laundering and terrorist financing – the Commission’s Action Plan and other recent developments

(2020/2686(RSP))

The European Parliament,

– having regard to the Commission communication of 7 May 2020 on an Action Plan for a comprehensive Union policy on preventing money laundering and terrorist financing (COM(2020)2800),

– having regard to the Commission’s reply to Written Question E-002805/2019,

– having regard to the reply given by the Commission during the meeting of its Committee on Economic and Monetary Affairs of 5 September 2019, regarding the examination of NGOs in respect of money laundering and terrorist financing,

– having regard to the Commission report of 24 July 2019 on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities (COM(2019)0370),

– having regard to Recommendation VIII of June 2015 of the Financial Action Task Force (FATF) on combating the abuse of non-profit organisations,

– having regard to the 2017 Annual Report of the Maltese Commissioner for Voluntary Organisations,

– having regard to the European Court of Auditors’ Special Report No 35/2018 of 18 December 2018 entitled ‘Transparency of EU funds implemented by NGOs: more effort needed’, which requests that the EU draw up a legal definition of NGOs,

– having regard to the judgment of the Court of Justice of the European Union in Case C-78/18, European Commission v Hungary[1],

– having regard to the statement by the Council and the Commission of 8 July 2020 on a comprehensive Union policy on preventing money laundering and terrorist financing – the Commission’s Action Plan and other recent developments,

– having regard to Rule 132(2) of its Rules of Procedure,

A. whereas the European Union Agency for Law Enforcement Cooperation (Europol) and the European Union Agency for Criminal Justice Cooperation (Eurojust) consider NGOs to be ‘subjects at risk’ in the anti-money laundering (AML) framework, either as fronts for terrorist organisations that raise and transfer funds or as legitimate enterprises that indirectly support the aims of terrorist organisations;

B. whereas the European Union has adopted robust legislation to combat money laundering and terrorist financing;

1. Deplores the fact that NGOs are still not obliged entities under the fifth Anti-Money Laundering Directive or under the international standards of the FATF, and that they are only marginally subject to customer due diligence as clients of banks, lawyers and accountants, despite the findings of Europol and Eurojust which conclude that such organisations are ‘subjects at risk’ in the anti-money laundering framework;

2. Is worried about the comments made by the Commission before its Committee on Economic and Monetary Affairs on 5 September 2019, to the effect that ‘it did not want to give the impression that such organisations are engaging in illegal activities’, which seems to imply that these organisations benefit from preferential treatment by regulatory and supervisory authorities, and that economic agents already under scrutiny by the supervisory authorities under the AML framework are somehow being criminalised; stresses that such an impression could easily be avoided if an appropriate AML regime for NGOs were in place;

3. Regrets the fact that the Court of Justice of the European Union ruled in case C-78/18 that the Hungarian transparency requirements for NGOs, which could have been a useful tool in the prevention of money laundering and terrorist financing, are in violation of EU law; stresses that the free movement of capital laid down in Article 63 of the Treaty on the Functioning of the European Union (TFEU) and Articles 7, 8 and 12 of the Charter of Fundamental Rights of the European Union should not be interpreted in such a way as to facilitate money laundering; is astonished by the reasoning of the Court regarding the interpretation of Article 65(1)(b) of the TFEU that money laundering and terrorist financing do not as such constitute a sufficiently serious threat to a fundamental interest of society; regrets that this ruling affirms that NGOs appear to be above the law;

4. Recalls that the 2017 Annual Report of the Maltese Commissioner for Voluntary Organisations, backed by Moneyval, clearly shows that non-profit organisations are prone to money laundering and terrorist financing, which seems to contradict the claim of the Commission in response to Written Question E-002805/2019 that the levels of money laundering/terrorist financing threat and vulnerability of such organisations are considered as ‘less significant’;

5. Urges the Commission to come forward with a formal definition of NGOs, since the lack of such a definition frustrates efforts to regulate the transparency and fiscal accountability of NGOs effectively;

6. Welcomes the fact that the Commission intends to analyse whether the current range of private operators subject to AML and counter terrorist financing (CTF) rules is adequate, and to learn from Member States’ experiences; regrets that the Hungarian experience will not be taken into account; calls on the Commission to incorporate NGOs within the scope of the definition of obliged entities under the Anti-Money Laundering Directive, to scrutinise their funding and expenditure thoroughly, and to adopt far-reaching transparency rules;

7. Believes that NGOs should follow the FATF recommendations on preventing terrorism financing activities, and that Member States must review the adequacy of their laws and regulations concerning entities likely to be abused for terrorist financing purposes, including NGOs, as suggested by Marco Letizi, the Commission expert on AML/CTF;

8. Urges the Commission not to cooperate, when debating or drafting AML/CTF rules, with NGOs that have not been thoroughly scrutinised and have not reported on the origin of their funds and expenditure;

9. Is worried that the announced adoption of a legislative proposal on bringing about EU-level AML/CTF supervision in the first quarter of 2021 further hollows out the competence of national supervisory authorities; believes that the failure of a limited number of national supervisory authorities in tackling money laundering does not warrant an EU-wide competence transfer from the national to the European level; is astonished that, in the light of the ongoing sovereign debt and banking crisis in the EU, the Commission is portraying the functioning of the Single Supervisory Mechanism and the Single Resolution Board as best practices; rejects the establishment of yet another supervisory body at EU level; suggests that guidelines on the application of EU law are much better suited to the task of aligning the practical application of AML;

10. Underlines the lack of credibility of the EU list of high-risk third countries having strategic deficiencies in their AML/CTF regimes and, in this context, emphasises that several countries of concern according to the FATF recommendations have not been added to this list, presumably following intense political pressure, while others that had a positive assessment have been included;

11. Notes that according to recent investigations, money transfer services, often used by immigrants to send money to their home countries, pose a serious threat, as there has been proof that these services are being exploited for money laundering or terrorism financing purposes; notes, furthermore, that law enforcement sources have suggested to the authorities responsible for monitoring money transfer networks to adopt a soft approach on a voluntary basis, as these businesses are typically owned and used by immigrant communities, and a more rigorous approach could have sparked criticism related to racism and discrimination;

12. Instructs its President to forward this resolution to the European Council, the Council, the Commission and the Financial Action Task Force.

 

• [1] Judgment of the Court of Justice of 18 June 2020, European Commission v Hungary, C-78/18, ECLI:EU:C:2020:476.