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Towards stricter EU anti-money laundering rules

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20140219PHT36474_landscape_600_300Money laundering accounted for 2.7% of the world's GDP ($1.6 trillion) in 2009, according to the UN. New technologies have made it even easier for criminals such as drug dealers, financial schemers and counterfeiters to launder their dirty money. On 20 February, the economic and civil liberties committees vote on tougher anti-money laundering rules, covering online gambling and requiring companies to provide more accurate information about real owners.

Definition
Money laundering is the process of disguising the illegal origin of the assets (usually cash) so that it cannot be linked to a crime (e.g., trafficking in drugs, arms and human beings, theft, extortion, corruption etc.).How it works
Criminals have many ways of concealing dirty money, but usually it consists of three stages:

1. Placement 2. Layering 3. Integration
Deposit dirty money into a bank account. Examples: splitting cash up in smaller sums for easier transportation abroad; switching it into gold bars or cheques Conceal the illegal origin of the funds. Examples: wire transfers; splitting between bank accounts, countries, individuals, companies Create an apparent legal origin for the funds which then re-enter the normal economic circuit. Examples: creating fictitious contracts, invoices, loans; fabricating casino winnings; disguising the ownership of assets

Source: OECD

Common techniques

  • Fictitious invoices: invoices are issued for fictitious services or for less than the value declared. This enables a company to justify the amounts it has in its bank accounts, making them legitimate.
  • Front companies: In order to 'pre-wash' illicit funds, bank deposits are made through shell companies (which exist on paper only) or businesses (also known as front companies) that are directly or indirectly linked to a criminal organization.

New rules will ensure more transparency and better overview of financial transactions, making it harder to set up fake companies and transfer dirty money from one account to another.
The plenary vote is expected to take place in March. Negotiations with the Council and the European Commission are likely to start when Italy takes over the presidency of the Council in the second part of the year.

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