In my previous blog post, I highlighted the draft legislations related to the EU Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), how genuine customers are already feeling the (negative) impacts of existing measures, and how these measures are putting intense pressure on the financial industry.

Let’s now take a deeper look at the draft measures being proposed and a practical solution to the problem of money laundering that the European Parliament is overlooking.

6AMLD Makes a Reversal

Under the new proposal, the EU’s Sixth Anti-Money Laundering Directive (6AMLD) makes a complete reversal that effectively increases the penalties for many crimes and offenses. It also makes conviction for money laundering easier as the burden of proof rests partially on the accused.

Here some simplified examples to illustrate how this works:

  • You are a pick pocketer and steal a wallet with €50 in it. For first time offenders, the sentence would be community service. Yet, the moment you use the money to buy yourself an ice cream, you are laundering money. Luckily, as the amount is low, the maximum penalty is only eight weeks imprisonment. If the ice cream man knows the money you are using to pay is stolen, then he is complicit in money laundering.
  • You have more money in your bank account than one would expect you to have based on your income. In the past, the prosecutor had to prove it had malicious origins. With 6AMLD, the prosecutor can argue that it is the proceeds of money laundering, and suddenly you are the one who has to prove that it did not come from a crime.

You could argue that this is only a problem for lawbreakers and that the penalties are too light anyway, but it erodes the legal principle. You cannot just increase all sentences at once through a back door and at the same time reduce the burden of proof. Whichever way you look at it, criminal penalties have been established in all countries after much discussion and careful consideration of all the pros and cons. 6AMLD drives right through that.

A New Authority is Not a Solution to the Problem

It is often jokingly said that politicians have two standard solutions for a problem: an investigative committee and a new authority. The Anti-money Laundering Authority (AMLA) is just that – a new authority.

The advent of the AMLA creates more necessary coordination between all authorities, more discussions about their responsibilities, more grey areas in between, and an extra authority whose rules and regulations must be implemented. The net result: more confusion and more complexity. Adding complexity only exacerbates the problem and will not stop actual criminals – the money launderers – from finding the gaps and exploiting them.

It will take some five years for the AMLA to be proven right or wrong. In either case, it is five years lost. In five years, there will be new politicians who will want to show their vigour by announcing a new authority that they say will solve the problem.

An Obvious but Overlooked Solution

Money laundering is a worldwide problem meaning that the best solution would be worldwide too. But seeing that is unattainable, the best feasible solution within the EU is an EU wide solution. The IMF recently stressed the point that no country on its own can combat money laundering and “countries must innovate together to find a solution.”

The AMLA is presented as the solution to improve the exchange of information between the national FIUs and assure consistent supervision. But why not an EU FIU replacing all national FIUs? If all suspicious transactions are reported to the same authority, then there is no need for the exchange of information anymore as all information is contained in one place. This would also provide the possibility to follow the money across borders to detect the largest money laundering organisations using the most advanced methods to hide their activities. Especially as these highly professional organisations are quite capable of making individual transactions appear legitimate, having a single source of data to track the combination of these transactions would quickly call out the money laundering pattern. 

Why isn’t such a solution proposed?

There can be only one reason: privacy. The moment you say the word “privacy” in the presence of politicians, the atmosphere freezes, and everybody becomes very cautious. This is understandable as privacy is precious to many people in this digital big-brother world. But instead of solving the money laundering problem with a great thought-out solution, a solution with the right balance between privacy protection and money laundering prevention, and with all privacy safeguards in place, the politicians dump the problem on the individual banks,  stating that they must adhere to the GDPR regulations. Banks that do not even have a proper domestic view, let alone an EU-wide. The number of suspicious transactions reported to the FIU is growing rapidly all over Europe, and with stricter measures announced, these numbers will only grow. As if that isn’t a privacy concern.

DNB calls for a more balanced approach

There is a shed of light. At least one regulator calls for a more balanced approach. In September 2022, the Dutch regulator DNB published the paper From Recovery to Balance, in which they argue for a more balanced approach that reduces the impact to genuine customers. In Spring 2023, the Dutch government announced corresponding measures.


An Alternative and Effective Solution

There is an alternative that could vastly improve money laundering detection: allow the banks to directly share money laundering-related information. It is striking that the measures do not even touch on this subject, where it is the top measure of the proposal for PSD3 by the European Commission (EC), announced at the end of June.

Is it a completely new idea? No, there are already some initiatives between banks that go further and exchange transactional data to find money laundering. In the Netherlands, the five largest banks exchange the pseudonymised transactions of their business customers: TMNL. Here you see a clear clash with privacy. These banks would like to add retail transactions as retail accounts are just as likely to facilitate the movement of money. However, the legislative changes required to make this happen fail long before the vote in Parliament due to privacy concerns. 

Again, a solution from the EC or European Parliament (EP) that offers the right balance between privacy protection and money laundering prevention is necessary. Imposing the task of finding global, well-hidden money laundering networks on individual banks without giving them the necessary means is like forcing the blind to see and the deaf to hear.


Genuine citizens will be hit harder if the measures announced by the EP are adopted and made law. The existing huge number of reported transactions is a creeping attack on the privacy of citizens, and this number will grow. At the same time, the measures miss the best opportunity to really strengthen the fight against money laundering: effective exchange of data to identify and unravel sophisticated worldwide money laundering schemes. Also, the measures announced are not a solution to the GDPR issue; simply stating that the banks must act GDPR-compliant is not a solution at all. The sad conclusion is that the measures announced make the situation more complex and unclear, and the EP does not appear to recognize the bad side effects.

Is the money laundering issue simple to solve? Absolutely not! But who said that governing would be simple? It is making tough decisions when necessary. It is naïve to think that a worldwide problem can be solved by putting more pressure on the individual banks without giving them the means needed. Banks will not be able to effectively fight money laundering with their hands tied behind their backs. The proposed measures preserve the money launderers’ privacy, whereas genuine customers suffer. These measures will do little to deter money laundering and instead give criminals the ability to expand their nefarious business across Europe.

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