1.
Introduction ^
This paper is based on the results of a largely empirical research in the framework of the EU project RESPECT1. For the research we developed a questionnaire, which was sent to numerous financial institutions, public authorities and software vendors and was also used as an interview guide2. All partners of the RESPECT consortium participated in disseminating the questionnaire and/or conducted interviews. Further, the European Banking Federation and FIU.NET, the EU computer network for financial intelligence units, were so kind to support this task by sending the questionnaire to their members. Additionally, we and our consortium partners compiled country reports3 containing an overview of the respective financial systems in various EU Member States. Further, we conducted in-depth desk research: studying software vendors’ websites, available publications, public watch lists and more.
2.
Grounds for Establishment ^
3.
Transaction Monitoring ^
4.
Watch Lists ^
5.
Fundamental Rights ^
6.1.
GIANOS ^
6.2.
Ma³tch Technology ^
7.
Conclusions ^
8.
References ^
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SWD(2013) 21 final, 25 December 2013.
Janos Böszörmenyi
Projektassistent, Universität Wien, Arbeitsgruppe Rechtsinformatik
Schottenbastei 10-16/2/5, 1010 Wien, AT
janos.boeszoermenyi@univie.ac.at
Erich Schweighofer
Ao. Universitätsprofessor, Universität Wien, Arbeitsgruppe Rechtsinformatik
Schottenbastei 10-16/2/5, 1010 Wien, AT
Erich.Schweighofer@univie.ac.at; http://rechtsinformatik.univie.ac.at
- 1 See for more details: http://respectproject.eu/.
- 2 Information obtained from financial institutions, public authorities or software vendors through a questionnaire or interview are indicated in footnotes.
- 3 Information based on country reports are indicated in footnotes.
- 4 Throughout the KYC procedure the financial institution ascertains itself of its customer’s personal information. This starts by obtaining information for identification as the customer enters a business relationship, and includes collecting information about the customer’s transactions and business partners. The intensity of the information gathering depends on the customer’s risk profile (interview with financial institution 2) in accordance with the so called risk-based approach of the FATF. KYC is used in this paper as a synonym for Customer Due Diligence (CDD), which is the common term in legal texts.
- 5 Software vendor 2.
- 6 SWD(2013) 21 final, 25 December 2013, p. 12.
- 7 SWD(2013) 21 final, 25 December 2013, p. 13.
- 8 Fair Isaac Corporation, Evolution of Card Fraud in Europe. http://www.fico.com/landing/fraudeurope/Evolution_Europe.html last accessed 25 December 2013 (2013).
- 9 FATF/OECD, 20 Years of the FATF Recommendations. http://issuu.com/fatf/docs/20_years_of_recommendations/1?e=0 last accessed 25 December 2013 (2010), p. 4.
- 10 Verhage, Antoinette, Between the hammer and the anvil? The anti-money laundering-complex and its interactions with the compliance industry. In: Crime, Law and Social Change (2009) 52, pp. 9–32, Springer (2008), p. 11.
- 11 Financial Action Task Force, History of the FATF. http://www.fatf-gafi.org/pages/aboutus/historyofthefatf/ last accessed 25 December 2013 (2013).
- 12 G7 Summit 1989, Economic Declaration, Drug Issues. In: University of Toronto, G8 Information Centre (ed.), http://www.g8.utoronto.ca/summit/1989paris/communique/drug.html last accessed 26 December 2013 (1989).
- 13 Financial Action Task Force, History of the FATF. http://www.fatf-gafi.org/pages/aboutus/historyofthefatf/ last accessed 25 December 2013 (2013).
- 14 A financial intelligence unit (FIU) serves as a national centre for the receipt and analysis of suspicious transaction reports, other information relevant to money laundering, associated predicate offences and terrorist financing, and for the dissemination of the results of that analysis (FATF Recommendation 29).
- 15 A more detailed list is available on the webpage of the UNODC. SeeUnited Nations Office on Drugs and Crime, Money Laundering: Related Link. http://www.unodc.org/unodc/en/money-laundering/links.html last accessed 26 December 2013 (2013).
- 16 Council of Europe, Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), Evaluations. http://www.coe.int/t/dghl/monitoring/moneyval/Evaluations/About_evaluation_en.asp last accessed 26 December 2013 (2013).
- 17 OJ L 309, 25 November 2005, p. 15.
- 18 OJ L 214, 4 August 2006, p. 29.
- 19 OJ L 271, 24 October 2000, p. 4.
- 20 OJ L 345, 8 December 2006, p. 1.
- 21 See COM(2013) 45 final, 5 February 2013.
- 22 See COM(2013) 44 final, 5 February 2013.
- 23 Verhage, Antoinette, Between the hammer and the anvil? The anti-money laundering-complex and its interactions with the compliance industry. In: Crime, Law and Social Change (2009) 52, pp. 9–32, Springer (2008), p. 11.
- 24 Verhage, Antoinette, Between the hammer and the anvil? The anti-money laundering-complex and its interactions with the compliance industry. In: Crime, Law and Social Change (2009) 52, pp. 9–32, Springer (2008), p. 12.
- 25 Tan, Pang-Ning/Steinbach, Michael/Kumar, Vipin, Introduction to data mining, Pearson/Addison-Wesley, Boston (2006), p. 6.
- 26 Compare Article 8 (1) d of the Third AML Directive.
- 27 Financial institution 1.
- 28 Software vendor 1.
- 29 Egmont Group, FIUs in Action, 100 case studies demonstrating FIUs in action. http://www.egmontgroup.org/ last accessed 28 December 2013 (n.d.), 172.
- 30 Tan, Pang-Ning/Steinbach, Michael/Kumar, Vipin, Introduction to data mining, Pearson/Addison-Wesley, Boston (2006), p. 207.
- 31 The compliance officer, or anti-money laundering officer, is responsible to detect cases of AML/CFT within the organisational structure of a financial institution.
- 32 Software vendor 2.
- 33 Nice Actimize, Anti-Money Laundering, Comply with Anti-Money Laundering Requirements from Regulators Worldwide. http://www.nice.com/financial-services-solutions/anti-money-laundering last accessed 28 December 2013 (n.d.).
- 34 Software vendor 1.
- 35 Fair Isaac Corporation, Fact Sheet, Link Analysis and Visualization Provide Insight to Complex Anti-Crime Regulations (2013), p. 2.
- 36 World Compliance, About Us, Our Solutions. http://www.worldcompliance.com/en/worldcompliance/world-compliance-solutions.aspx last accessed 3 January 2014 (n.d.); Software vendor 3.
- 37 Info4c, Fact Sheet PEP DeskTM. http://www.info4c.net/en/docs/Factsheet_PEP_Desk_E.pdf last accessed 8 January 2014 (n.d.).
- 38 Financial institutions are legally obliged to identify PEPs (Article 13 (4) of the Third AML Directive). PEPs are individuals who are or have been entrusted with prominent public functions (FATF Recommendations Glossary).
- 39 Compare Article 8 (1) b of the Third AML Directive.
- 40 Thomson Reuters Accelus, World-Check, IntegraScreen Reports. https://www.world-check.com/de/our-services/integrascreen-reports last accessed 3 January 2014 (n.d.).
- 41 Ohler, Christoph, Die Verhängung von «smart sanctions» durch den UN-Sicherheitsrat – eine Herausforderung für das Gemeinschaftsrecht. In: Europarecht (EuR) 2006, Heft 6, pp. 848–865 (2006), p. 850.
- 42 Dahme, Gudrun, Terrorismusbekämpfung durch Wirtschaftssanktionen, Mendel Verlag, Witten (2007), p. 23.
- 43 Dahme, Gudrun, Terrorismusbekämpfung durch Wirtschaftssanktionen, Mendel Verlag, Witten (2007), p. 21.
- 44 Financial Action Task Force, The FATF Recommendations. http://www.fatf-gafi.org/MEDIA/FATF/DOCUMENTS/RECOMMENDATIONS/PDFS/FATF_RECOMMENDATIONS.PDF last accessed 3 January 2014 (2012), p. 39, Footnote 3.
- 45 The EU’s consolidated financial sanctions list can be visited under http://eeas.europa.eu/cfsp/sanctions/consol-list_en.htm last accessed 3 January 2014.
- 46 SWIFT, Solutions, Sanctions Screening. http://www.swift.com/assets/swift_com/documents/products_services/SWIFT_Sanctions_Screening_factsheet.pdf last accessed 28 July 2013 (2012), p. 1.
- 47 European Data Protection Supervisor, Press Release (EDPS/2013/07, Brussels, 4 July 2013), EDPS finds major deficiencies in anti-money laundering proposals. https://secure.edps.europa.eu/EDPSWEB/webdav/site/mySite/shared/Documents/EDPS/PressNews/Press/2013/EDPS-2013-07_AML_EN.pdf last accessed 3 January 2014 (2013), p. 1.
- 48 See Security Council Resolution 1904 (2009). During a lecture at Washington University the UN Ombudsperson explicitly referred to the ECJ’s Kadi judgment as the reason for the creation of the Office of the Ombudsperson: Prost, Kimberly, Lecture at the Washington University School of Law, 15 Octobre 2012. http://mediasite.law.wustl.edu/Mediasite/Play/%201e4546751a1b42fe83203a356ba55a69 last accessed 4 January 2014.
- 49 Security Council Resolution 2083 (2012) carried out the latest amendments in this regard.
- 50 For more background information see ECJ, Joined Cases C‑584/10 P, C‑593/10 P and C‑595/10 P, Commission and Others v Yassin Abdullah Kadi, Judgement of the Court of 18 July 2013.
- 51 See:http://sdnsearch.ofac.treas.gov/ last accessed 5 February 2014.
- 52 Software vendor 3.
- 53 Country Report Italy, p. 8.
- 54 OASI, The GIANOS System and The GIANOS Procedure, Powerpoint (2005), slide 13.
- 55 Chatain, Pierre-Laurent et. al., Preventing Money Laundering and Terrorism Financing: A Practical Guide for Bank Supervisors, World Bank Publications, Washington DC (2009), p. 64.
- 56 OASI, The GIANOS System and The GIANOS Procedure, Powerpoint (2005), slides 20-22.
- 57 See for more details:Kroon, Udo, Ma3tch: Privacy AND Knowledge, «Dynamic Networked Collective Intelligence». http://ieeexplore.ieee.org/xpl/articleDetails.jsp?tp=&arnumber=6691683&queryText%3DUdo+Kroon last accessed 23 January 2014 (2013); FIU.NET, FIU.NET Unlimited, Ma³tch. https://www.fiu.net/fiunet-unlimited/match/match3 last accessed 3 January 2014 (n.d.); Public Authority 1.
- 58 Balboni, Paolo/Macenaite, Milda, Privacy by design and anonymisation techniques in action: Case study of Ma3tch technology. In: Computer Law & Security Review: The International Journal of Technology Law and Practice 29, pp. 330-340, http://www.sciencedirect.com/science/article/pii/S0267364913000964 last accessed 3 January 2014 (2013), p. 333.