Fight against money laundering and terrorist financing

The EU anti-money laundering rules make it difficult to hide illegal funds under layers of fictitious companies, and strengthen checks on risky third countries.

The EU is committed to fighting money laundering and cutting terrorist financing

Why cutting terrorist financing is an EU priority 

Risks of money laundering and the financing of terrorism are a major concern for the EU's financial system and the security of its citizens.

Since 2018, the EU has stronger anti-money laundering rules in place. These rules make it difficult to hide illegal funds under layers of fictitious companies, and strengthen checks on risky third countries. They also reinforce the role of financial supervision authorities, and improve access to and exchange of information.

However, the rules needs to continuously adapt to tackle risks from:

  • technological innovation – such as virtual currencies  
  • increasing integration of financial flows in the internal market
  • the global nature of terrorist organisations
  • the ingenuity of criminals to exploit gaps or loopholes in the system

Timeline

07/12/2022

Anti-money laundering: Council agrees its position on new rules

29/06/2022

Provisional agreement reached on transparency of crypto asset transfers

29/06/2022

New EU Authority for Anti-money laundering: Council agrees its partial position

05/11/2020

Council supports further coordination and EU-level supervision

19/05/2020

Council discusses plans to strengthen fight against money laundering and terrorist financing

See full timeline

In June 2019, the European Council adopted its strategic agenda 2019-2024. Protecting citizens and freedoms is one of its four priorities.

We will build on and strengthen our fight against terrorism and cross-border crime, improving cooperation and information-sharing, and further developing our common instruments.

European Council, A new strategic agenda 2019-2024, 20 June 2019

Financial Action Task Force (FATF)

The challenges are global, and require strong cooperation at international level. The EU works with its partners in FATF to build and implement international standards.

FATF develops and promotes policies against money laundering and terrorist financing and issues recommendations that countries should apply.

Its recommendations are being widely implemented in the EU via the fifth anti-money laundering directive.

2020 action plan on fighting terrorist financing

In December 2019, the Council adopted strategic priorities to further strengthen the EU framework in the fight against money laundering and terrorist financing.

In May 2020, the European Commission followed up with an action plan. It sets out measures for the following year to better enforce, supervise and coordinate EU rules in this area.

On 5 November 2020, the Council adopted conclusions on anti-money laundering and terrorism financing. The conclusions act as guidance, in particular for setting up: 

  • a single rule book harmonising EU rules
  • an EU-level supervisor with direct supervisory powers
  • a coordination and support mechanism for national financial intelligence units

In July 2021, the European Commission proposed a package of legislative proposals to strengthen the EU measures in this area. The EU institutions are currently working on this package. 

EU anti-money laundering legal framework

The fifth anti-money laundering directive

The fifth anti-money laundering directive (EU) 2018/843 entered into force in June 2018. It aims to:

  • improve transparency in the ownership of companies and trusts
  • strengthen checks on risky third countries
  • address risks linked to prepaid cards and virtual currencies
  • enhance cooperation between national financial intelligence units
  • improve cooperation and exchange of information between anti-money laundering supervisors and the European Central Bank

It was complemented in October 2018 by a directive introducing measures to combat money laundering by criminal law. 

These rules seek to balance the need for increased security with the protection of fundamental rights and economic freedoms. The amendments also brought EU legislation in line with international standards developed within the FATF.

On 29 March 2023, the ambassadors of the EU member states agreed the negotiating mandate for this proposal which would ease the access of national authorities to financial information.

Cracking down on the abuse of crypto assets

The EU is working to stop criminals and terrorists from circumventing anti-money laundering rules via crypto currencies.

Transparency of crypto asset transfers

On 29 June 2022, the Council and the Parliament reached a provisional agreement on the update of the EU regulation on information accompanying the transfers of funds. The new rules will introduce an obligation for crypto asset service providers to collect and make accessible certain information about the senders and beneficiaries of the transfers of crypto assets they operate.

This will ensure the traceability of crypto-asset transfers in order to be able to better identify possible suspicious transactions and block them.

Strengthened anti-money laundering rulebook

On 7 December 2022, the Council agreed its position on a regulation and a directive - two key pieces of legislation in the strengthened EU rulebook for anti-money laundering and combating the financing of terrorism.

Once adopted, the new rules will make it much more difficult to launder dirty money anywhere in the EU. There will be an EU-wide maximum limit of €10 000 for cash payments.

Anonymity will be restricted for the trading of crypto-assets, as all crypto-asset service providers will be obliged to conduct due diligence on their customers for transactions amounting to €1000 or more. This means that the providers will have to verify facts and information about their customers.

The scope of the rules will be extended to third-party financing intermediaries, persons trading in precious metals, precious stones and cultural goods, jewellers, horologists and goldsmiths. They will be subject to the obligations under the new rules.

Checks on anti-money laundering prevention in third countries

As per directive (EU) 2015/849, the Commission maintains a list of non-EU countries with deficiencies in their anti-money laundering prevention regimes. Financial transactions with these countries require additional due diligence measures. 

In March 2019, the Council rejected a draft list put forward by the Commission of 23 high-risk third countries. The Council considered that the proposal "was not established in a transparent and resilient process that actively incentivises affected countries to take decisive action while also respecting their right to be heard". 

In May 2020, the Commission presented a revised methodology for listing high-risk third countries. It also presented an updated list of high-risk third countries – not yet based on the revised methodology – which entered into force in July 2020. 

Supervision and access to information

In 2019, a number of legislative initiatives further consolidated the EU's legal framework.

In May 2019, the fifth capital requirements directive clarified the role of prudential supervisors. They are responsible for identifying and disciplining weaknesses of financial institutions involved in money laundering and terrorist financing. Competent authorities must factor these concerns into their supervisory activities.

In June 2019, the directive on facilitating the use of financial information for combating crime was adopted. It makes it easier for competent authorities to access and use financial and bank account information. It also facilitates access to law enforcement information by national financial intelligence units.

In December, the role of the European Banking Authority (EBA) was strengthened. An amendment to the founding regulations gave the EBA and its supervising authorities a legal duty to contribute to preventing the use of the financial system for the purposes of money laundering and terrorist financing. The mandate entered into force on 1 January 2020.

The visual shows a globe covered with information icons connected with dots. Three hands are each holding a magnifying glass focusing on a passport, some banknotes and a fingerprint. The background is a sky with clouds.

What is the EU doing to tackle terrorism?

Take a journey through two decades, exploring how EU countries have been cooperating ever more closely on counter-terrorism: from preventing terrorists from buying weapons or building bombs, right through to trying to counter radicalisation in the first place.