EU-wide use of bank retention data to facilitate financial investigations

In future, financial information will also be queried across borders for serious crimes, and even more authorities will have access. Banks and other financial service providers will have to adhere to deadlines for the release of financial information. In Germany, the EU directive is likely to increase competition between customs and the criminal police.

The European Union wants to expand the cross-border use of financial information. Data from central bank account registers will not only be used to combat money laundering and terrorism, but also to prosecute serious crimes. This is the result of a proposal for a directive on „facilitating the use of financial and other information“ presented by the European Commission in April and now being discussed by the Council and Parliament. The proposed Directive is part of the „European Security Agenda“ adopted in April 2015.

„Prevention, detection, investigation or prosecution“

In a financial analysis, data is processed that must be retained by all financial service providers for financial transactions. This also affects providers of international money transfers. The institutions are obliged to provide information on their customers, including lockers. Financial information is also stored with tax and anti-corruption authorities. Data from the Asset Recovery Offices responsible for freezing or confiscating unlawfully acquired profits are also used.

The aim of financial investigations, however, is not only the confiscation of unlawfully acquired property, as facilitated by the repeatedly revised Money Laundering Directives. Information that can be reconstructed from banking transactions is intended for „prevention, detection, investigation or prosecution“ of criminal offences. Customs, the police and the secret services should draw conclusions from the account information about possibly further suspicious persons and also use this information for security purposes. In its proposal, the Commission writes that the financial information should help „to stop criminal activities“ and prevent „terrorism offences“. Several action plans issued by the European Union on various crime phenomena call for increased use of financial information, including „smuggling of migrants“ and drug trafficking.

Networking of central bank account registers planned

Access for authorised authorities is also to be extended. To date, only 15 EU Member States have set up central bank account registers or similar „data retrieval systems“. Only in six Member States some competent authorities have direct access. However, competent authorities should not always be able to consult account balances or transaction details. Direct access displays the name of the account holder, the date of birth and the account number.

Further information from private financial service providers usually requires a judicial authorisation and must be requested through a cross-border mutual legal assistance procedure. According to the Commission, this leads to „significant delays“. The Directive should therefore shorten and harmonise the mandatory response times. Finally, the networking of Member States‘ central bank account registers remains on the agenda. By mid-2019, the Commission intends to present an assessment of this.

Each EU Member State has appointed a Financial Intelligence Unit (FIU). These FIUs have been networked since 2006, the German Federal Criminal Police Office has also been participating in these informal meetings since 2008. The network is headed by the Commission and is managed by the Directorates-General for Internal Affairs and Internal Market and Services. For the exchange of information, the national units use the decentralised computer network FIU.net, which has been managed by the police agency Europol since 1 January 2016.

Dispute with customs

Although Europol manages the FIU.net information system of the hotlines involved, it does not yet have its own access to the bank account registers in the Member States. Europol had described this deficit in a report published in 2017 entitled „From suspicion to action – Converting financial intelligence into greater operational impact“.

If Europol were also to have access to financial data, as provided for in the current proposal for a directive, and if this were to be extended to serious crime, a further conflict would arise between the German Ministry of Finance and the Ministry of the Interior. In the case of Germany, this responsibility lies with the Federal Criminal Police Office (BKA). However, the German FIU Reporting Office has no longer been located at the BKA for a year now, but at the General Customs Directorate and thus in the area of responsibility of the Ministry of Finance.

After the move to customs, German criminal investigation offices complained several times about the lack of processing of incoming suspicious reports. According to a customs action paper, tens of thousands of unprocessed reports piled up there. Reports to police and public prosecutors are often „incomplete, incorrect and useless“, content analyses „hardly available“. Urgent cases were not reported at all or only with considerable delay. Reports are sometimes sent to any state criminal investigation office, although its jurisdiction is not obvious.

BKA provides „software analysis tools

The German BKA is now using its international networking to present itself at EU level as German partner for financial investigations. Last week, the criminal police authority announced that its Political State Security Department had launched an international project to combat the financing of terrorism. It is funded by the European Commission and is intended to „expand and deepen“ cooperation with financial transfer providers. The goals also include better cross-border networking of financial investigators in the EU member states, but also with the Federal Bureau of Investigation (FBI) in the USA. The aim is, for example, to pursue the purchase of weapons and ammunition, „propaganda measures“ or „training of assassins“.

According to the BKA, police state security units from France, the Spanish national police, Europol and the international financial transfer service provider Western Union took part in a kick-off conference in Cologne. The German FIU is also to be involved. Next year, the BKA will offer several workshops on financial data evaluation. The courses would use „software analysis tools“ which would also be available to participants after the end of the course. The BKA does not provide more detailed information on the digital tools, presumably they are software for the evaluation of mass data.

Image: Europol (JurgenNL).