Does the Italian Tax Amnesty create problems for UK MLROs? Part I

Here is an interesting conundrum re Suspicious Activity Reporting (SAR) and the 3rd EU AML Directive. The highlighted Bloomberg article outlines the confluence of a Tax Amnesty, Money Laundering, Tax Evasion, the bank induced recession and the law of unintended consequences.

This proposed Tax Amnesty law was approved by the Italian Government on 2nd October 2009 (see BBC article: http://news.bbc.co.uk/1/hi/world/europe/8288185.stm) and it poses an interesting challenge to UK AML regulated MLRO’s and firms.

Here is a hypothetical question for you which may highlight why. An existing client, probably with an Italian connection, wants to repatriate funds / financially convertible assets to Italy. Your routine monitoring of transactions illicits an admission that your client wants to take advantage of the announced amnesty. Under UK AML regulation and law, where does that leave you and your personal reporting obligation?

Well I’ve got a view (it’s Part II ) but I’d love to hear what you would do and why?

Implementation of the 3rd AML Directive

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The AML buffs amongst you will recall that the Member States of the European Union had to transpose the 3rd AML Directive (Directive 2005/60/EC) into national law by 15 December 2007 at the latest. As if that was going to happen!

Anyway, the European Commission published an update in July 2009. They now say that almost all Member States have fully aligned their national legislation with this Directive.

The list of exceptions, however, makes for interesting reading:
§ The Republic of Ireland and Spain where the implementation measures are still pending;
§ Belgium, France and Poland have only partially implemented the Directive.

Interestingly all Member States which had not yet adjusted their legislation were referred to the European Court of Justice (ECJ), which is pictured above; two have been already convicted by the ECJ for their failure to transpose the Directive within the period prescribed: Ireland on 19 May 2009; Sweden on 11 June 2009 (Sweden has in the meanwhile fully implemented the Directive).

I would suggest that all those firms and individuals who conduct business with the relevant laggards familiarise themselves with the current state of play in these countries and adjust their risk matrices accordingly.