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European Commission proposes action plan to strengthen AML/CFT

The European institution published an action plan on May 7, 2020 including the various measures that the Commission will take within twelve months of the publication of the plan. The objective of this approach is to implement the monitoring and coordination of the application of the European Union (EU) anti-money laundering and combating the financing of terrorism (AML/CFT) regulations.

To this end, the Commission has highlighted six key points, starting with the need to ensure that European rules are effectively enforced by EU member states.

The Commission also indicates that it will provide states with a set of rules in the first quarter of 2021, pointing to the diversity of interpretations of the current rules by states and the risks of crime that this generates.

In addition to this set of rules, the Commission will propose the establishment of a European supervisory authority to close the loopholes implied by the current supervisory system in which member states are individually responsible for ensuring the proper application of EU rules.

In the same vein, the Commission will propose a coordination mechanism at the European level with the aim of strengthening the activities of the financial intelligence units of the Member States.

The Commission also indicates its willingness to issue guidance on public-private partnerships, emphasizing the role of such partnerships, particularly to enhance information exchange.

Finally, the European Commission stresses the importance of strengthening the EU's position at the international level, especially in relation to high-risk third countries, i.e. countries with AML/CFT arrangements that pose risks to the EU financial system.

In this sense, in parallel to the action plan, the Commission has developed a new method for identifying these high-risk third countries, taking into account the interaction between the EU and Financial Action Task Force (FATF) listing procedures. The new method also consists of a consolidation of the dialogue with third countries and the consultation of experts from the Member States.

In addition, the Commission announces that it has revised its list of high-risk third countries, bringing it into line with those issued by the FATF. The countries included in the Commission's list are the Bahamas, Barbados, Cambodia, Jamaica, Ghana, Botswana, Panama, Mongolia, Mauritius, Myanmar, Nicaragua and Zimbabwe. Ethiopia, Lao People's Democratic Republic, Bosnia and Herzegovina, Sri Lanka, and Tunisia are no longer on the list of high-risk third countries.

However, the Commission specifies that the regulation amending the list in question will only be applied from 1 October 2020. The Commission justifies this relatively late application by the health crisis, explaining that this delay is intended to allow stakeholders sufficient time to prepare. The removal of countries from the list will be effective twenty days after the regulation is published in the Official Journal.

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