EU States Lagging Behind in Implementing Financial Transparency Measures for Cannabis Industry

A recent report by the Financial Action Task Force (FATF) has revealed that EU member states are falling behind in implementing new financial transparency measures aimed at curbing money laundering and terrorist financing in the cannabis industry. The report found that only 14 out of the EU’s 27 member states have fully implemented the FATF’s Recommendation 24, which mandates the establishment of beneficial ownership registers or equivalent mechanisms to ensure transparency in company ownership.

The FATF, an intergovernmental organization dedicated to combating financial crimes, plays a crucial role in setting global anti-money laundering (AML) standards. Its Recommendation 24 emphasizes the importance of transparency in company ownership to prevent the misuse of corporate structures for illicit activities. By identifying the true beneficial owners of companies, authorities can better track and disrupt financial flows associated with money laundering and terrorist financing.

The sluggish progress in implementing FATF’s Recommendation 24 among EU member states raises concerns about the effectiveness of AML efforts in the cannabis industry. This industry, with its growing legalization and increasing financial attractiveness, is considered particularly vulnerable to money laundering risks. Failure to adequately implement the FATF’s standards could leave the cannabis industry susceptible to illicit activities, potentially undermining the integrity of the financial system.

To address these concerns, EU member states must prioritize the full implementation of FATF’s Recommendation 24. This includes establishing comprehensive beneficial ownership registers that provide accurate and accessible information on the true owners of companies. Additionally, member states should strengthen their AML frameworks and enhance cooperation with law enforcement agencies to effectively combat money laundering and terrorist financing in the cannabis industry.

In conclusion, the EU’s tardiness in implementing FATF’s Recommendation 24 poses a significant risk to the integrity of its financial system. By prioritizing the implementation of these measures, EU member states can safeguard the cannabis industry from illicit activities and contribute to a more secure and transparent financial environment.

The Financial Action Task Force (FATF) is an intergovernmental body that sets global anti-money laundering standards through its 40 recommendations¹. It has recently adopted a new standard on transparency in company ownership². This new standard, known as FATF’s Recommendation 24, requires every country to set up a beneficial ownership register or sufficient alternative to allow authorities to see who ultimately owns or controls a company².

Failure to adhere to these recommendations can have serious consequences, as countries that are black or grey-listed may face challenges in accessing the global financial system¹.

Learn more:

1. transparency.org2. transparency.org3. fatf-gafi.org4. fsb.org5. transparency.org