Crime almost always involves the movement of money. Terrorist financing, political corruption, and human trafficking, for example, all rely on our financial system to disguise their profits’ illegal origins. And there are a wide variety of money laundering techniques to do so. In a more general sense, however, money laundering is more than the act of covering up the illegal sources of funds, i.e cleaning dirty money. It also includes the reverse: using legitimate money to fund criminal activities. Either by actively covering up who the real recipient of the money is, ultimate beneficial owner (UBO), e.g. an individual involved in terrorism, or by protecting the identity of sponsors.
Decoding and combating criminals comes down to advances in AML processes and efficient legislation. In Europe, the Parliament issues Anti-money laundering directives (AMLD) periodically, as part of domestic legislation to decode . Every directive includes updated regulatory obligations on member-state governments. The latest is the 6hth (6AMLD), which had to be implemented by regulated entities by 3 June 2021. The 6AMLD aims to strengthen anti-money laundering work in the EU and place higher responsibility on regulated entities in the fight against financial crime.
Conclusively, because of the need for implementation, there are however differences in the approach of different Member States and sometimes opposed conclusions are drawn. As a result, this is of course extremely problematic in the EU, where obliged entities are providing cross-border services. The differences in how the directives are implemented lead to a general confusion and inefficiency.
Instead of a directive, the need for introducing regulation has been brought to light as a solution to stronger harmonize EU anti-money laundering efforts, making the legislation efficient. In addition to a more unified and collaborative approach to combating money laundering and crime, it is imperative for businesses to invest in sustainable long term solutions such as digitizing and automating AML processes in order to cut off the flow of funds financing global crime.