Economic stability is one of the key aspects of a country's prosperity. However, despite the legal order, money laundering is a problem on the way to comprehensive wellbeing. In contrast, the international community is constantly creating norms aimed at combating this phenomenon. Since the last century, the EU has been introducing new guidelines and rules by harmonizing and updating the legislation of its members.

The origins of European legislation on money laundering date back to 1980. On 27 June 1980, the Committee of Ministers of the Council of Europe adopted the Recommendation "On measures against the transfer and the safekeeping of funds of criminal origin". This document suggested that banks should establish measures to identify customers and strengthen security requirements for financial transactions. However, these changes did not significantly affect banking institutions in European countries.

The most active development of EU legislation in this area took place in the 1990s. This was primarily due to active transnational crime, which provoked a response from the entire international community.

In the same years, the norms and recommendations of the FATF (The Financial Action Task Force), an international financial organization established ad hoc, were actively developed on a global scale. In turn, international recommendations became the basis for the adoption of the first landmark document in the field of combating money laundering, adopted on 19 June 1991 - the First Council Directive on prevention of the use of the financial system for the purpose of money laundering (91/308/EEC).

What was enshrined in the First Directive?

· mandatory identification of credit and financial services customers in case of a transaction exceeding 15,000 euros or the equivalent in local currency;

· the obligation of credit and financial institutions to inform the relevant authorities of suspicious transactions;

· the obligation to disclose bank secrecy in case of money laundering;

· extension of the Directive's rules to other businesses and organizations where such a violation may be committed;

· the obligation to update legislation, etc.

The next document at the European level was of the European Parliament and of the Council of 4 December 2001 amending the 1991 Directive (Second Directive).

The landmark provision of the above document was the expansion of the list of criminal offences related to money laundering. Thus, money laundering was recognized as a crime not only in the field of drug trafficking, but also in other types of criminal activity.

Despite the significant influence of the 1991 and 2001 directives, the EU has begun work on a new package of regulations in the field of money laundering. In 2004, the European Commission expressed the need to update the legislation in this area and laid the groundwork for a new document - the Joint Directive of the European Parliament and of the Council of 26 October 2005 on on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (Third Directive).

What was the essence of this document?

The Third Directive was aimed at harmonizing international legislation with European law. Among the additions to the criminal prohibition of money laundering, terrorist financing, and strengthening the identification of banking customers, the Directive established a requirement to protect employees who became aware of criminal activity in the above areas and reported it to the relevant authorities.

The development of EU legislation did not stop there. Taking into account the recommendations of the FATF, the EU developed the Fourth Directive of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.

What was the document about?

The Fourth Directive elaborated on the FATF recommendations, in particular, it established more detailed requirements for the identification and verification of banking customers, provided for the establishment of registers of ultimate beneficial owners in the EU, recognised the predicament of tax crimes to money laundering and introduced stricter requirements and sanctions in this area.

On 30 May 2018, EU lawmakers drafted the fifth document in a row, Directive 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or the financing of terrorism and amending Directives 2009/138/EC and 2013/36/EU.

The essence of the document was to establish requirements for preventing money laundering by introducing transparency in transactions of legal entities, trusts, and other legal entities.

Later, it became necessary to update the anti-money laundering regulations. On 30 May 2024, the EU Council adopted a package of anti-money laundering rules, including, inter alia, EU Directive 2024/1640 amending and repealing the Fourth EU Directive 2015/849.

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