A tricky balance for anti-money laundering regulations

Proposals on the prevention of money laundering and terrorist financing should be more specific to guard against over-profiling – according

Proposals on the prevention of money laundering and terrorist financing should be more specific to guard against over-profiling – according to European Data Protection Supervisor (EDPS)

Two proposals were recognized by the commission on 5 February 2013: The first on the prevention of the use of financial structures for the purpose of money laundering and terrorist financing and the second, for a regulation of the European Parliament and of the Council on information on the financier associated with the transfer of funds.

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With an understanding that the proposals are authentic and that analysis of personal information within the context of money transfers, is key to the prevention of terrorist financed activity through money laundering, the EDPS suggests that often, companies who are given the task of or right to undertake such profiling, are not skilled or adequately directed in this process and can cause harm to legitimate parties. It explains that companies who are instructed to engage in the profiling process are urged to report any suspicious activity to the appropriate authorities and failure to do so is met with threat.

EDPs recommends the following:

  • Profiling should be done in defense of money laundering for terrorist financing only and not to be abused.
  • All proposals dealing with the concerns of terrorist financing should include details about EU data protection law.
  • People that are being profiled should be explicitly informed about this process.
  • Any punitive action taken against individuals or businesses must be objectively justifiable.

Requirements for international transfers are to be added to proposals which account for proportionality (A legal principle undermunicipal law in which the punishment of a certain crime should be in proportion to the severity of the crime itself).

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