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Data Protection, Money Laundering and Terrorism

The Article 29 Working Party has issued a new Opinion and provided recommendations aimed at helping balance the need to prevent money laundering and the financing of terrorism with the need to protect privacy.

The Article 29 Data Protection Working Party has issued 44 recommendations concerning privacy and data protection related to the prevention of money laundering and terrorist financing (anti-money laundering and combating the financing of terrorism or 'AML/CFT'). The recommendations were adopted at a plenary meeting of the Working Party on 13 June. They can be accessed here.

The recommendations are intended to give a perspective and practical guidance to legislators, reporting entities, regulators, financial intelligence units (FIUs), supervising authorities and other stakeholders that are called upon to apply principles and regulations in both areas to the prevention of money laundering and terrorist financing as well as privacy and data protection at EU as well as national level. The recommendations address a need perceived by the Working Party for practical and broad guidance at the level of the EU in the combined area of the prevention of money laundering and terrorist financing as well as privacy and data protection. 

The main ideas that are addressed in the recommendations are:

* Privacy and data protection are established within the EU as a human right as part of a democratic society according to law (ECHR, Article 8), and should always be applied as such rather than on the grounds of legitimate interest or the consent of the data subject. Hence, measures that are imposed as obligations to prevent money laundering and terrorist financing should always have a clear legal basis and remain necessary and proportionate to the nature of the data. The WP29 recommends a review of current and proposed AML/CFT laws at EU and national level (rec. 3), more EU harmonization (rec. 5); readable public data protection policies (rec. 12), clear information for visible AML/CFT measures such as questionnaires and the limitation of services (rec. 13), and the strict and clear application of the purpose limitation principle in AML/CFT laws (rec. 15-16).

* The principles and obligations in this area should be dealt with in a balanced way, taking into account the different opinions, interests and legal framework in the EU and beyond. Examples include the redaction of AML/CFT laws and guidance (rec.2), the use of prior data protection assessments (rec. 7-9), the balanced use of feedback (rec. 22), the avoidance of goldplated AML/CFT regulations (rec. 23), balanced data sharing schemes (rec. 26), a balanced view on data retention mechanisms (rec. 28), a balanced view of the prohibition of tipping off that respects data protection rights (rec. 12-13).

* Privacy and data protection rights and obligations should always be addressed and developed in this area in a positive way, rather than referring to privacy and data protection in a negative way. Examples of negative approaches are to present privacy and data protection as an obstacle that can or should always be circumvented, and the approach that is limited to the blanket application of exceptions to data protection legislation, ignoring the conditions for such exceptions, and offering in return no real content and substance to privacy and data protection in the context of AML/CFT processing. The idea of a positive approach is illustrated by the recommendations that concern specific measures such as the adoption of public and documented privacy and data protection compliance policies by reporting entities, FIUs and financial supervisors (rec. 11), internal, confidential data protection policies (rec. 14), the prevention of identity theft (rec. 38), the use of FIU disclaimers for the use of typologies (rec. 19) and feedback mechanism (rec. 21), the provision of appropriate safeguards for every profiling operation (rec. 20.), continuous data accuracy assessments (rec. 29) the storage of data source and date for all AML/CFT data and assessments (rec. 30), access and supervision via DPAs (rec. 34) and the protection of sensitive data (rec. 37).

* The Working Party recommends that in order to offer real, effective protection and compliance with privacy and data protection in this field, the application of different forms of prior assessment of AML/CFT laws, procedures and projects should be undertaken. Such forms include privacy impact assessments, auditing techniques, the work of data protection officials (rec. 7-10). Also recommended are quality assessments such as BCR stress tests for institutions that wish to adopt BCRs (rec. 39), the required benchmark for adequacy findings for international transfers (rec. 40), and the use of MOUs by FIUs as tools for data protection (rec. 43).

* Continued and improved cooperation amongst different stakeholders is required in order to ensure legal certainty at EU level, including the different supervising authorities such as DPAs, FIUs and Financial Regulators (rec. 17).  

The Working Party 29 intends to follow up the recommendations and the relevant developments in legislation and practices.

 

Published: 15/06/2011

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