The proposed Framework Decision on money laundering


Submission by Statewatch on the proposed Framework Decision on money laundering and the proceeds of crime (9903/00 DROIPEN 24) to the House of Lords Select Committee on the European Union, Sub-Committee "E"

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Proposed Framework Decision on money laundering: full text: Council of the European Union

Explanatory memorandum on the proposed Framework Decision (9903/00 DROIPEN 24 ADD 1): full text: Council of the European Union

Statewatch submission

The following comments also take account of the Outcome of Proceedings of the meeting of the Council working party on substantive criminal law on 26 and 27 July 2000 (Council document 10692/00 Limite Droipen 33, 2 August 2000).

General Comments

The ‘conversion' of an existing Joint Action into a Framework Decision is welcome, in particular because it will give the European Court of Justice the opportunity to interpret the provisions of the measure. It is, of course, not correct that the Court's jurisdiction is ‘confined to disputes between Member States', as asserted by the Austrian delegation at the aforementioned Council working party meeting, since 11 Member States (including Austria) have accepted that the Court also has the jurisdiction to give preliminary rulings on post-Treaty of Amsterdam Title VI measures on references from national courts. Such conversions are also welcome because they clarify the legal effect of the measures in question. However, when agreeing such a conversion the Council should take the opportunity to examine deficiencies in the existing measures being converted.

On grounds of transparency, it may also be preferable to convert all of the pre-existing Joint Action into a post-Amsterdam measure, rather than leaving certain provisions ‘behind' as the French Presidency suggests in this case.

According to the Outcome of Proceedings of the aforementioned Council working party meeting, some Member States wished to consider defining the underlying ‘predicate offences' committed prior to money laundering. We would question the necessity for such a definition unless there is a full discussion beforehand of the appropriateness of the harmonisation of material criminal law in the Union.

Specific provisions

Article 1

There should be specific reference to data protection standards, particularly with the extension of Member States' obligations to cover tax offences.

Article 2

There has been no general public discussion at European Union level of the appropriateness of harmonised sentencing laws and their content after harmonisation. Pending such a discussion we doubt the appropriateness of setting minimum sentences.

Article 4

The Home Office's apparent description of the effects of this clause is not correct. Only part of the optional grounds for refusal in Articles 18(3) and (4) will be removed. Any amendment to UK legislation to implement the Framework Decision should not therefore result in waiving all reservations under these Articles. Moreover, it should be emphasised that the proposal would have broader effects besides removing the ‘double criminality' rule, which usually relates to substantive criminal law. This Article would also mean that confiscation orders would be issued where such orders would not normally issued in connection with the request in question under the procedural law of the requested state. In effect, this requires one Member State to alter its procedural law when receiving a request and apply instead the procedural law of the requesting state.

Such a step should not be taken without providing for a mechanism for legal control of such cross-border actions. Which country's law should apply to any legal challenge to the validity or application of the measure in question, and which country's court should be competent to hear it? No development in the area of mutual recognition should be agreed at EU level without clear and effective answers to such questions. There must be EU rules that make any challenge to the legality of a cross-border order as easy as a challenge to the legality of a purely domestic order. This is particularly the case as regards Article 18(3) of the 1990 Convention, which requires Member States to enforce types of order not provided for at all in their domestic legislation. If such enforcement is allowed, there must be a system to challenge it that is as easy to use as challenges to established types of domestic enforcement actions. This ‘equality' principle as regards cross-border actions is found in Article 5 of this proposal as regards enforcement; following the principle of ‘equality of arms' in Article 6 ECHR, it should be applied equally to the defence.

Article 6

The proposal would require Member States to give effect to confiscation orders, if they have been requested by another Member State, at an earlier stage in the proceedings than normally allowed under national law. This development runs the risk that it will be impossible to challenge such orders effectively, since the UK courts will not have made the order and may not be able to provide an effective forum for a challenge to the merits of the order, given the different nature of the criminal law system in the UK. Therefore Article 6 should not be adopted in its present form.

Article 4(1) of the 1998 Joint Action

This Article of the prior Joint Action should also be reviewed and amended when agreeing this Framework Decision. It provides for ‘informal' cooperation to request cross-border enforcement actions. The absence of formal requests makes it more difficult for persons affected to challenge the legality of the underlying requests and runs the risk of non-observation of data protection rules. Given the simplification of transmission of cross-border requests now agreed in the EU Mutual Assistance Convention of May 2000, there is in any event no longer any justification for this provision on grounds of administrative convenience. It should therefore be deleted by the proposed Framework Decision. Indeed, the remainder of Article 4 could be deleted once the Mutual Assistance Convention enters into force, due to cross-over with the obligations set out in that instrument.

Statewatch submission prepared by Steve Peers, Reader in Law, University of Essex.

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