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Anti Money Laundering In The EU – Are We Making Any Progress?

The EU has revised its money laundering legal framework a number of times over the last decade. The first directive on money laundering was issued and adopted in 2005. Since then a lot has happened. Although there are many gains that have already been made in anti money laundering, the complexity of this activity has become even more challenging. The integration of technology in financial transactions has made it easier to track transactions. But laying down the technological capability and surrounding institutional framework to identify and prevent cases of money laundering has proved very difficult for many Payment Service Providers.

What Is Money Laundering?

Although most people who have directly been involved in anti money laundering efforts will clearly understand what this is, for the layman out there it can be very hard to really understand this concept. To put it in a very simple way, money laundering is the process of cleaning up dirty money. It’s a complex process that is used by criminal organizations to hide the illegal origin of their money and to channel it through the mainstream financial system in order to fund their criminal activities.

Has the EU Made Any Progress in Anti Money Laundering?

In order to clearly understand whether there has been any meaningful progress in anti money laundering in the EU we must understand the history. The AML policy in the European Union has largely been preventative. Measures have been put in place to reduce exposure to money laundering and to help banks or other payment service provider to be proactive in their strategies instead of reactive. So far, preventive measures have achieved some measure of success.

The investment towards real time transaction monitoring, Know Your Customers strategies, and compliance tracking are some of the key preventative measures that payment service providers have put in place to counter the threat of money laundering. There has also been a major development in involving key stakeholders in the policy making process. We are seeing now that banks, payment service providers, and other institutions in the financial markets are having a bigger say in the policy direction taken by the EU over the last few years.

This has helped to harmonize anti money laundering responses and improve collaboration between the players in the financial markets and the regulatory bodies. But even with all this progress there is still a lot that needs to be done. The changing nature of money laundering and the emergence of terror financing as a problem within the EU has necessitated for more collaboration to ensure all loop holes are sealed. Integration of better and more responsive technology systems is also needed to ensure that the human error factor is minimized as much as possible.

The road towards tackling money laundering in the EU is and will continue to be tough. But there is a lot of commitment especially among stakeholders in the financial industry to ensure that the vice is dealt with. Companies like Trapets are also playing a part through their technologies.