The United Kingdom (UK) is raising concerns over the new European Union (EU) Anti-Money Laundering Directive and may be considering a legal challenge against it.
Last month the Council of Ministers and European Parliament came to a consensus on anti-money laundering issues and with it the new Directive is in the final stages of being formally endorsed and approved.
UK May Opt Out
Under the Anti-Money Laundering Directive, countries in the EU would be required to have financial intelligence units responsible for discovering links between suspicious transactions and potential criminal activity.
These units would also be responsible for exchanging information with other units to provide further assistance.
The goal of the Directive is to hinder money laundering and financing any potential terrorist activities.
However in regards to EU policies that could affect justice and home affairs, the UK has a right to take part in them or not.
In the case of the new Directive, concerns exist that it will greatly affect justice and home affairs in the UK.
If the Directive is implemented, the UK government may take the option of challenging it before the Court of Justice.
Lord Boswell, chairman of the Lords’ EU Committee, has criticized the UK government on their stance.
In a letter sent to commercial secretary of the Treasury Lord Deighton last year, Boswell is surprised the UK feels the financial intelligence unit provision of the Directive shouldn’t apply to them, especially considering they supported the provisions during early negotiations of the Directive.
Financial Transparency
Sensing that the UK is bound for challenging the directive, Lord Boswell sent Lord Deighton another letter, also criticizing the secretary of the Treasury for his late response.
“You are no doubt aware that, in the context of international agreements, the Government has attempted similar challenges before the Court, and has five times failed,” said Boswell in the letter. “We would be grateful for your explanation of what possible advantage there can be in attempting such a challenge yet again. An attempt to preserve the Government’s position on the legal base, a position in which this Committee believes is incorrect, seems to us a totally inadequate reason.”
In his list of concerns, Deighton addresses how gambling may be affected by the directive in the UK.
He states that except for casinos, any businesses that provide gambling services would have the option of being exempt from the Directive on a basis of risk.
Deighton also says that “under the latest compromise, Member States granting such an exemption would have to notify and justify this decision to the Commission.”
Issues with e-money, data protection and digital currencies are also discussed in Deighton’s response to Boswell.
The consensus seems to be that the UK doesn’t feel that the Directive is the proper method in controlling or regulating these sectors.
Yet Boswell seems convinced that the Directive is meant to create one regime capable of handling all these issues, rather than splintering them into several potentially unnecessary ones.
US Casinos Face Pressure
The US Treasury’s Financial Crimes Enforcement Network (FinCEN) is also taking increased steps to prevent money laundering in American casinos.
A number of anti-money laundering laws have been implemented in the US. The 2001 PATRIOT Act allowed the government for more access to bank records and more information sharing between financial institutions and the US government.
Similar to the EU’s Directive, much of the PATRIOT Act was meant to prevent the funding of terrorism and widespread money laundering.
FinCEN is currently putting the pressure on casinos due to an increased amount of criminals using sports betting to hide where their funds come from.
Casinos are expected to file and report suspicious activities or risk criminal and civil penalties.
It is estimated that almost $400 billion is illegally wagered on sports each year in America.
Because the NFL playoffs and college sports seasons usually account for a great deal of sports betting, FinCEN decided to address casinos in late December, making their letter only recently public.
