European Commission Struggles To Break Deadlock Over Money Laundering Rules

by Ulrika Lomas, Tax-News.com, Brussels

04 October 2001

MEPs met in Strasbourg on Tuesday in an attempt to break the deadlock over a crucial proposal in new money laundering legislation which has so far been resisted by the European parliament.

Spurred on by the events of September 11th, the Commission is desperate to reach a compromise over proposals which would increase the reporting requirements for lawyers in cases of suspected money laundering. If agreement is not reached within the next six weeks, under EU rules, the entire process of constructing anti-money laundering legislation will be forced to begin again, an option which is neither attractive nor viable in the current global climate.

The principal fly in the ointment is Klaus-Heiner Lehne, the MEP who drafted the European Parliament's proposals on new money laundering rules. In Mr Lehne's draft legislation, lawyers are permitted to preserve their rights of confidentiality until they are certain that their advice is being used to aid criminal or terrorist money laundering. He has argued that the EC's rules, which are broader in scope than those of the Parliament, are too restrictive, and would be difficult to implement in member states such as Austria and Germany.

This is not the first time that the EC and the European Parliament have clashed this year, and in the previous debacle, it was Mr Lehne who was once again firmly in the driving seat, criticising and eventually defeating a directive for a European takeover code. At the time he was widely criticised for stalling financial regulatory harmonisation across Europe, and it is clear that many MEPs see him as something of an irritant. 'I am sure a time-consuming and expensive process could have been avoided if the commission had taken a stronger line and exposed the weakness of Lehne's position,' mused Baroness Sarah Ludford, the Liberal Justice Spokesperson.

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