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Directive (EU) 2018/1673

  • Anti-money laundering and counter-terrorist financing (AML/CTF)
  • Directive (EU) 2018/1673 on the combating of money laundering by means of criminal law

Key dates

  • 3 December 2020: Deadline for Member States to transpose the directive into national law.
  • 3 June 2021: Deadline for regulated entities to comply with the directive.
  • 3 December 2022: Presentation to the European Parliament and the Council of the European Commission's report assessing the extent to which Member States have taken the necessary steps to comply with the directive.
  • 3 December 2023: Presentation to the European Parliament and Council of the European Commission's report evaluating the added value of the AML/CFT Directive and its impact on fundamental freedoms and rights.

Objectives of Directive (EU) 2018/1673

  1. Define the notion of criminal activity & money laundering offences (Art. 2 & 3); ;
  2. Establish the penalties applicable to natural persons (Arts. 4 & 5); ;
  3. Define aggravating circumstances in cases of money laundering offenses (Art. 6). ;
  4. Establish the liability and penalties incurred by legal persons in the event of a money laundering offence (Art. 7 & 8); ;
  5. Promote cooperation between Member States (Art. 10); ;
  6. Define the measures to be taken by Member States regarding confiscation and investigative tools (Arts. 9 & 11).

1. Criminal activity and money laundering offences (Art. 2 & 3)

Directive (EU) 2018/1673 defines a criminal activity as any form of criminal participation in the commission of an offence which, under national law, is punishable by a custodial sentence or a measure involving deprivation of liberty for a maximum period of more than one year (six months for Member States whose legal system provides for a minimum threshold for offences). The directive contains a list of categories of offences considered to be 'criminal activities' (Art. 2).

Directive (EU) 2018/1673 defines the following behaviours as money laundering offences:

  • The conversion or transfer of property, when the person engaging in it knows that the property originates from a criminal activity, with the aim of concealing or disguising the illicit origin of that property or of assisting any person involved in such activity to evade the legal consequences of the acts they have committed; ;
  • Concealing or disguising the true nature, source, location, disposition, movement, or ownership of property or rights relating to such property, knowing that the property or rights derive from a criminal offence. ;
  • The acquisition, possession or use of property, where the person engaging in it knows, at the time of receipt, that it derives from criminal activity.

Member States shall take the necessary measures to ensure that money laundering offences are criminal offences punishable by sanctions when committed by natural persons who have committed the criminal activity from which the property derives or participated in it (applicable only to the transfer or conversion of goods and for the concealment or disguise of real property, its nature, origin, locality, tenure, quality, incidents, and value, or the rights in respect of real property).

2. Sanctions applicable to individuals (Art. 4 & 5)

Directive (EU) 2018/1673 requires Member States to take the necessary measures to ensure that:

  • A person who is complicit in, incites, attempts or commits a money laundering offence shall be liable to effective, proportionate and deterrent criminal sanctions. ;
  • The person who commits a money laundering offence is liable to a maximum prison sentence of at least 4 years.

3. Aggravating circumstances (Art. 6)

Directive (EU) 2018/1673 requires Member States to take the necessary measures to ensure that the following circumstances are considered aggravating:

  • The offence was committed as part of an organised crime group. ;
  • The offender is a taxable entity that committed the offence in the course of its business activities:
  • Credit institution ;
  • Financial institution ;
  • Auditor, chartered accountant or tax advisor ;
  • Notary and other independent legal professions ;
  • Trust service provider ;
  • Estate agent ;
  • Property dealer (>€10,000) ;
  • Gambling and betting service provider.

4. Responsibility and sanctions incurred by legal entities (Art. 7 & 8)

Directive (EU) 2018/1673 requires Member States to take the necessary measures to ensure that a legal person can be held liable for any money laundering offence when the offence is committed on its behalf by:

  • Anyone who holds a senior position within it; ;
  • A person subject to their authority. When the offence was made possible by a lack of supervision or control on the part of the directors.

The criminal liability of legal persons does not preclude criminal proceedings against natural persons who are perpetrators, instigators or accomplices of a money laundering offence.

Directive (EU) 2018/1673 requires Member States to take the necessary measures to ensure that a legal person held liable for a money laundering offence is subject to effective, proportionate and dissuasive sanctions, which include criminal or non-criminal fines and possibly other sanctions, including:

  • Exclusion from the benefit of a public advantage or aid; ;
  • Temporary or permanent exclusion from access to public funding; ;
  • The temporary or definitive prohibition of carrying out commercial activity; ;
  • Placement under judicial supervision ;
  • A judicial dissolution measure. ;
  • The temporary or permanent closure of establishments used to commit the offence.

5. Cooperation between Member States (Art. 10)

When a money laundering offence falls within the jurisdiction of several Member States, Directive (EU) 2018/1673 requires Member States to cooperate to decide which of them will prosecute the perpetrator of the offence in order to centralise the prosecution in a single Member State.

Within this framework, the following elements must be taken into account:

  • The Member State on whose territory the offence was committed; ;
  • The nationality or residence of the offender; ;
  • The country of origin of the victim or victims; ;
  • The territory on which the perpetrator of the offence was found.

6. Confiscation & Investigative Tools (Arts. 9 & 11)

Directive (EU) 2018/1673 requires Member States to take the necessary measures to ensure that their competent authorities, as appropriate, freeze or confiscate the proceeds of, or property and assets involved in, the commission of the offences of money laundering or of contributing to the commission of such offences, as well as the instruments used or intended for use for such purposes.

Directive (EU) 2018/1673 requires Member States to take the necessary measures to ensure that effective investigative tools, such as those used in combating organised crime or other serious forms of crime, are made available to persons, units or services responsible for investigating or prosecuting money laundering offences.

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