The future of EU policy on preventing money laundering and terrorist financing

Robert CaringtonOn 27 January 2021, Paolo Panico TEP, the Chair of STEP Europe, moderated a webinar hosted by Anti-Money Laundering Europe (AME) on the future of the European Union’s policy on preventing money laundering and terrorist financing.

The panel included Steve Ryan, deputy head of the financial crime unit in the Directorate-General (DG) Internal Market and Services of the European Commission (EC); Eero Heinäluoma, Member of the European Parliament (EP); and Roger Kaiser, Senior Policy Advisor, European Banking Federation.

The EC stated that it planned to unveil its consultation feedback and a new legislative package in the near future following the May 2020 action plan.

The consultation feedback had reportedly showed support for EU action in this area as well as significant support for further harmonisation in all areas, particularly for obliged entities and beneficial ownership registers.

The proposed legislative package will focus on only three out of the six pillars of the action plan, which are a harmonised rulebook; EU level supervision; and a coordination and support mechanism for financial intelligence units (FIUs). The plan is for the package to be adopted in spring 2021.

The main proposals of the package for each pillar are:

  • to put in place a more integrated framework;
  • to establish a new AML authority at the centre of an EU AML supervisory system. This should have direct supervisory powers over financial institutions and oversight/coordination powers in the non-financial sector;
  • to set up a mechanism to coordinate and support FIU work, fully integrated in the new AML authority. It will provide technical support and assistance to analysis produced by FIUs, including joint work.

The EP representative called for an updated rulebook to keep up with new developments like crypto-assets, and noted that supervisors should be supported with appropriate tools and resources. It stressed that reform is needed and was looking forward to receive the EC proposal.

Industry representatives called for a single EU rulebook and supervisory convergence and stressed the need to avoid a ‘tick the box’ approach, or any regulatory or supervisory fragmentation. It also called for guidance to help balance out GDPR and AML requirements.

 

Robert Carington is Policy Executive at STEP

Modernising Lasting Powers of Attorneys in England and Wales

The Ministry of Justice (MoJ) and the Office of the Public Guardian (OPG) have jointly initiated a project to modernise the process of making and registering lasting powers of attorney (LPAs), which may include an element of digitisation. They will be collaborating on a series of scoping events, roundtables and surveys to obtain research that will culminate in the publication of a consultation in spring 2021 to gather evidence and inform the future of the LPA service.

On 19 November the MoJ and OPG invited STEP to attend a virtual roundtable, which was introduced by Alex Chalk MP, Parliamentary under Secretary of State in the MoJ and hosted by Nick Goodwin, Public Guardian and Chief Executive of the OPG. During the roundtable, discussions were held on two specific areas of the research and engagement so far.

Improving safeguards for the donor in relation to identity checks

There was general consensus that there need to be more advanced identity checks for donors, which would consequently improve safeguards. It is a prevalent concern of the industry that identity fraud and theft are fairly accessible particularly if someone has access to a Health & Welfare LPA and the donor is incapacitated or vulnerable. It was also flagged that ID verification online may be technologically robust but there will be a small demographic, usually the more elderly, that do not have access to a computer or smartphone for verification. It was also reinforced that it is essential that any new online system is securely piloted within the industry before it is implemented.

The importance of the role of witnesses

It was recognised by attendees that the process of obtaining witnesses for LPA signing can add some gravitas and formality to the process, which in turn also gives the donor time to consider the importance of the legal document that is being created. It was also considered that it might be more appropriate to introduce digital signatures for the witnesses but to retain the obligation of the physical signature for the donor. On 9 November, STEP’s UK Industry News Digest covered highlights of the results of the first survey that has been undertaken, which showed that more than 90 per cent of 410 solicitors surveyed in England and Wales want to retain the rule requiring LPAs to be physically signed by the donor rather than by electronic means to prevent fraud.

We were informed that these areas have been marked for more extensive research under this initiative and will be discussed further.

The MoJ and OPG have stressed that empowering and protecting the individuals acting as donors in the LPA process is of paramount importance and amendments to the legislation will only be made if modernisation will provide the same level of protection or preferably enhance it. However, it is clear that the world is becoming more digital and we have seen accelerated evolution on the digital platform due to the COVID pandemic this year.

The MoJ and OPG intend to carry out extensive engagement within the industry, alongside the consultation next year, and will gather a wide range of evidence and expertise to understand user needs and challenges. STEP will continue to engage with the MoJ and OPG and monitor the progress of this initiative.

Emily Deane TEP, STEP Technical Counsel