THE END OF PRIVACY FOR EU CITIZENS: A CLOSER LOOK AT THE FOURTH ANTI-MONEY LAUNDERING DIRECTIVE

Abstract

The progressive development of the European AML/CTF legislation combined with the clear target to eliminate tax evasion has resulted in the over-burdensome administrative monitoring of every EU citizen and the increasing undermining of fundamental civic rights. Accordingly, the 4th AMLD raises questions about its efficiency and the preservation of the principles of the law. In this context, a very critical point is that the 4th AMLD includes the conformity of ML, TF and tax evasion which questions the admissibility of the Directive in principle due to the lack of harmonisation of criminal law and of the definition of tax crimes relating to direct and indirect taxes.In particular, as there is no reciprocity among the member states in the field of tax evasion in many areas in terms of what is punishable and what is not, the 4th AMLD raises fundamental questions on data protection and an European law enforcement that, by lack of harmonisation, allows the conduct of European investigations without the existence of a criminal offense in the respective member state. At the same time, the high-risk third country and non-cooperative jurisdictions policy in the EU led to the criminalisation of countries that are primarily considered as tax havens, but which pose no actual criminal threat to the security through terrorist financing or money laundering of funds generated from illegal sources. The “Panama Papers” have raised questions about and criticism of existing policies regarding offshore structures. The legislative reaction has been one of blind activism. The fight against terrorism and the prevention of tax evasion are being used as arguments, both politically and in the media, to create increasingly far-reaching legislation that allegedly create fair taxation and prevent terrorist attacks. The integration of these highly divergent objectives into the EU AML framework has led to an explosion of compliance costs in the EU and worldwide, with no empirical data to suggest the actual effectiveness of this legislation in preventing terrorist attacks. Neither an intensified customer due diligence nor a comprehensive monitoring and control of millions of financial transactions of ordinary citizens can prevent the new low-tech method of terrorist attacks, since these attacks require only minimal financial resources. Primarily, the 4th AMLD is apt to spy on ordinary citizens without any initial suspicion to an unprecedented degree. Today, the EU promotes an on-going unbridled and unrestricted transfer of personal data to thirdparty countries by virtue of the AML framework, placing every citizen under a general criminal suspicion and carrying out investigations under this policy without grounds for reasonable suspicion, which is incompatible with the rights described in the ECHR and the Charter of Fundamental Rights. Therefore, the proposals for the amendment of the 4th AMLD that suggest to extend the powers of the FIUs must include a detailed review of the rights to privacy and data protection that citizens enjoy by virtue of the ECHR and the Charter. The extension of the powers to investigate tax evasion ultimately requires the prior harmonisation of the bases for offences punishable under criminal law within the EU.