EU: The EC Money Laundering Directive

Abstract

The Council Directive on prevention of the use of the financial system for the purpose of money laundering was passed on 10th June, 1991, and the anti money laundering legislation of the Member States of the European Union (EU) is now largely based on it. It had its origins in the growing awareness from the mid‐1980s onwards that money laundering was an international problem and therefore international action was needed if it was to be combated effectively. This had led to the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, adopted in 1988 and generally referred to as the Vienna Convention, and the Council of Europe Convention on the laundering, tracing, seizure and confiscation of the proceeds of crime, drawn up in 1990 and generally referred to as the Strasbourg Convention. Both the Vienna and the Strasbourg Conventions are explicitly referred to in the Preamble to the Directive. Other activity had included a study by the Financial Action Task Force (FATF), which published its report, with recommendations in 1991. That said, certain countries had already taken some action against money laundering: in the UK for example, the laundering of the proceeds of drug trafficking had been a criminal offence, carrying up to 14 years' imprisonment, since 1986.