A review of tools to comply with the Fourth EU anti-money laundering directive

The aim of this paper is to present tools that are used by financial institutions to implement legal requirements with regard to anti-money laundering (AML) and combating the financing of terrorism (CFT). The fight against money laundering and terrorist financing is a two-stage procedure, where state authorities outsource a major part of their tasks and responsibilities to private entities. The bulk of the task falls to financial institutions, which have to monitor the transactions of their customers pursuant to international, European and national laws as well as internal policies. To comply with the legal requirements, they use sophisticated surveillance software and collect large amounts of personal data. The European Union introduced two Proposals (COM(2013) 45 final and COM(2013) 44 final) to update the European Union's AML/CFT regime. Even though the Proposals have not yet become legal acts, it is quite obvious that new tools to support financial institutions will emerge. The amendments foreseen by the Proposals as well as already existing tools, which will remain relevant, shall be examined and privacy considerations will be discussed.