The European Commission has sent legal warnings to Cyprus, Portugal, the Netherlands and five other EU states over their delays in applying new anti-money laundering rules adopted at European Union level two years ago.
The 27 EU states were required to enact by January tighter rules to counter dirty-money risks in a wide range of sectors, including cryptocurrency exchanges, prepaid cards and shell companies.
The announcement came the same day a much awaited report was released by the Council of Europe’s anti-money laundering body Moneyval. Moneyval which found that Cuprus has taken positive steps towards anti-money laundering and countering the financing of terrorism.
The report, which was welcomed by the government and other stakeholders in Nicosia, listed five important positive developments, but also noted nine major shortcomings which hinder the effectiveness of the Cypriot regime.
The EU’s rules were proposed in 2016 by the EU Commission in the wake of the Paris terrorist attacks which killed more than 130 people. The clampdown was meant to hamper terrorist funding and other financial crimes.
EU governments and lawmakers agreed on the new rules three years ago and then formally adopted them in 2018, but Cyprus, Hungary, the Netherlands, Portugal, Romania, Slovakia, Slovenia and Spain have not yet turned them into national laws, the EU Commission said on Wednesday.
It sent them a letter of “formal notice”, the first step of a lengthy legal procedure that could lead to fines if rules are not correctly applied.
The warnings show heightened attention by EU authorities for the fight against money laundering after a series of high-profile cases that hit major banks in the bloc in past years.
Under the latest overhaul, cryptocurrency exchange platforms are required to identify their users, ending anonymity that could favour money laundering. It will also be easier to identify the ultimate owners of companies and trusts.