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Brigitte Unger, Joras Ferwerda, Melissa van den Broek and Ioana Deleanu
Statistics on AML policy can be classified into two types: input statistics, which are the resources invested in AML policy like the budget of the FIU and other relevant institutions, and output statistics, which are the result of the AML policy, such as the reports disclosed to the FIU and the number of prosecutions and convictions for money laundering. It is very hard to use output statistics as an actual indicator for AML policy, because an increase in the number of reports can be the result of a greater anti-money laundering effort or an increase in the amount of money laundering. In this chapter we explore to which extent the differences in statistics between EU Member States can be explained. Moreover, these data form the basis for a cluster analysis, which shows that in terms of AML policy the 27 EU Member States consist of four groups which have their own distinct characteristics.
The lack of hard data makes any country-by-country cost-benefit analysis of AML policy impossible at the moment. But by using the estimates that are available, and correcting these estimates for the price level and size of the countries, the chapter is able to estimate almost all cost components and some benefits for each EU Member State. This study estimates that the total costs of the 27 EU Member States are about 2 billion Euros, together with an immeasurable reduction in privacy and some inefficiency in the operation of society. Since most of the benefits of AML/CTF policy are hard or impossible to estimate, the cost benefit dilemma is basically reduced to the question: Does the EU want to spent about 2 billion Euros to obtain potential benefits, which include an unquantifiable reduction in money laundering, less crime in general, a reduced damage effect on the real economy and less risk for the financial sector?
Although the FATF 40 Recommendations, the Third Directive, and other international conventions all require various essential elements of money laundering to be criminalized, there remains a considerable divergence between the criminal provisions in the Member States in practice. This chapter reveals numerous significant differences between EU Member States in the definitions of money laundering in practice and classify them accordingly.
Ioana Deleanu and Joras Ferwerda
This chapter explores to what extent the policy response towards money laundering is effective in relation to the money laundering threat the EU Member States face. It is argued that AML policy response can be captured by several indicators: FATF compliance, legal effectiveness, timeliness of implementation, FIU response, international cooperation, information flows and the number of convictions for money laundering. The exploratory analysis is based on a set of figures which have a policy response indicator on the horizontal axis and the threat measure on the vertical axis. The chapter considers the diagonal area in these figures to mark an appropriate policy response - i.e. a policy response that is more or less proportional to the AML threat a country is facing. The chapter shows that most Member States have proportional AML policy responses. Nevertheless, all of them can improve on at least one aspect of their policy response with the positive exception of Denmark, that has, in the analysis of the chapter, relatively low levels of threat and relatively high policy response scores.
In this chapter it is investigated several hypotheses surrounding FIUs that are put forward by the economic and institutional literature as well as by anecdotal evidence gathered from AML specialists. First of all, what types of FIUs are there in the EU and how are they spread? Second, are all FIUs equally financially independent, and, if not, what are the financing structures put in place across Europe? Why do administrative FIUs have more staff and budget? Third, do all FIUs perform the same tasks, and, if not, why are some FIUs assigned more tasks? Are resources proportional to the number of additional tasks? Fourth, what type of feedback do FIUs give to their reporting entities? Is geography a barrier in providing feedback? Fifth, which databases do FIUs have access to, and in what way? What are the most common ways for FIUs to overcome the lack of access to a certain database? Finally, what type of IT platforms for data management and filtering are put in place across the EU-FIUs? Do reporting entities report more manually in countries with a low IT intensity?
Melissa van den Broek
This chapter compares the way in which EU Member States have implemented the substantive provisions stemming from the Third EU Directive. It shows that the substantive norms under the preventive anti-money laundering policy have to a large extent become harmonized within the European Union, but that the way in which Member States have implemented these norms varies considerably. This divergence may affect the legal effectiveness of Member States' preventive anti-money laundering policies. This chapter also pays attention to the recent proposal for a fourth EU Directive.
Brigitte Unger and Melissa van den Broek
The anti-money laundering policy of EU Member States is a policy that comprises of many international norms, stemming from different international organizations and the European Union. All of these international norms have to be implemented into national legislation. This chapter assesses how EU Member States perform on implementing relevant international conventions and analyses the time delays of EU Member States in implementing the Third EU Directive.
In this chapter first the forms and functions of the prosecution services are explored and how these impact the effective repression of money laundering. Then this information flow theory is used to construct a measure of effective communication between the law enforcement agencies involved in the repression of money laundering and show that countries with a higher value information flow have more prosecutions and convictions for money laundering. Finally, this information flow index is used to construct a measure of criminal repression across the EU and discuss several ways to improve country information flows in the hope to decrease criminal incentives to commit money laundering.
Ioana Deleanu and Melissa van den Broek
First this chapter looks at how international cooperation takes place, within the AML framework. The chapter tests the hypothesis that in the EU, cooperation in AML matters takes place only between homologue institutions. The chapter then examines the various international cooperation channels available for cooperation within the EU and outside the EU. Since there are more international cooperation channels available to European counterparts with the aim of strengthening European cooperation, the chapter hypothesises that, for international FIU cooperation, cooperation between EU FIUs is easier than cooperation between EU and non-EU FIUs. The criterion the chapter uses for testing this hypothesis is the speed of information exchange. Finally, the chapter tests the hypothesis that international cooperation among the FIUs takes place mostly among neighbouring countries.