The directive is designed to prevent money laundering and terrorist financing through the financial system.
What is defined as terrorist financing and money laundering?
The member states of the European Union prohibit terrorist financing and money laundering and can implement stricter provisions in this area. The following conduct provides the definition for money laundering:
The transfer or conversion of property that is derived from or participation in criminal activity with the objective of hiding or disguising the origin of the property
Providing assistance to any individual involved in the commission of this type of activity
Disguising or intentionally concealing the nature, source, disposition, location, movement and ownership rights of the property
Acquiring, possessing and or using the property with full knowledge that the property derived from criminal activity. An individual who intentionally commits this type of behavior must recognize that the property in question derives from criminal activity.
Awareness, intention and purpose may be assessed through careful examination of the facts and circumstances surrounding the case. The directive goes on to include participation, association with, attempts to, aiding, advising and or facilitating of the items mentioned earlier. The directive considers that any activities that generated the property in relation to money laundering, whether within a member state or non-EU member state is considered part of the criminal activity. Terrorist financing is defined as providing and collecting funds, either directly or through a third party for the purpose of using them for the purpose of committing an offense as prescribed in articles 1 through 4 (refer to the Council Framework Decision 2002/475/JHA of 13 June 2002) concerning fighting terrorism. This includes falsifying documents, taking hostages and leading a terrorist group among others.
The legal professions responsibility concerning vigilance with their customers. The directive covers both financial institutions as well as individuals working in professional roles as accountants, auditors, notaries, tax advisors, real estate agents and other legal professions. Both the financial institutions as well as the previously mentioned professional segments are obliged to follow adequate due diligence processes in the following areas:
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