EC Proposes Tougher Money Transfer Rules

by Ulrika Lomas, for LawAndTax-News.com, Brussels

28 July 2005

The European Commission on Tuesday presented a proposal designed to tighten controls of money transfers in order to cut off funding sources for terrorists and other criminals.

The proposed Regulation would require that money transfers be accompanied by the identity of the sender including the name, address and account number. The measures in question would also ensure that this information would be immediately available to the appropriate law enforcement authorities in order to assist them in detecting, investigating and prosecuting terrorists and other criminals and tracing their assets.

Under the EC proposal, in order to ensure the traceability of money transfers, obligations are established for banks and money remitters involved in the payment chain. The requirements apply to transfers of funds in any currency that are sent or received by a payment service provider in the EU.

In a statement, the Commission announced that under the new regime:

"The name, address and account number of the sender of the transfer must always be transmitted together with the funds. This information will only be provided to the competent authorities for the purposes of preventing, investigating, detecting, or prosecuting money laundering or terrorist financing. A simplified version of this regime is proposed for money transfers within the EU, in line with the efforts to build a single market for payments."

"As even small amounts can be used to finance terrorism, banks or money remitters will have to transmit information on the sender regardless of the amounts involved. Similarly, when receiving funds, regardless of the amounts involved, they will have to subject those funds to special scrutiny, and ultimately reject any unidentified transfers or terminate business relationships with their counterparts when these systematically fail to provide information on the sender."

Internal Market Commissioner Charlie McCreevy explained that:

“The fight against terrorism requires a sustained and focused effort on many fronts. One of these is to cut off the funding for terrorist actions. Only one month after the final adoption by the Financial Action Task Force of an international standard on money transfers, the Commission shows, with the adoption of this proposal, its determination to fully participate in the international effort to combat terrorism”.

The UK Presidency has indicated that it will give priority to this proposal and technical discussions are due to begin imminently.

Recommended