Much of HRIF.EU’s work — and indeed its very reason for existing — is based on identifying and dismantling the excessive body of control rules inspired by the United States, which in the Netherlands has led to enormous costs, discrimination and unnecessary exclusion. Over some time already it becomes apparent that the rule of law is not similarly appreciated between the US and EU (see analysis here).
It is abundantly clear that, over the past 25 years, we have allowed ourselves to be drawn deeply into an American climate of excessive monitoring and surveillance. This does not mean that we believe police officers and public authorities should not have the right to request and investigate information. But the balance has been lost.
The EU Charter fundamental rights should be inherently respected on a case by case and policy basis
In our response (see the summary here) to the European AMLA consultation on anti-money laundering legislation, we repeatedly stress that Europe must stand on its own two feet. We should not take U.S.-inspired FATF rules as the starting point for our work, but rather the European Union’s own Charter of Fundamental Rights.
We should not say: because the AML Regulation allows it, we may simply disregard fundamental rights. On the contrary, assessments of those fundamental rights should be built into day-to-day AML work. In policies, evaluations, in designing alerts, in shaping the blocking rules. Everwyhere. And that is the core essence of our feedback to the AMLA.
The Union has its own legal order and Charter of Fundamental Rights, which must remain the governing framework for AML/CFT policy: the AML Regulation is not a free pass to simply disregard human-rights impact assessments.
The santions matter is re-affirming the urgency
The problem is currently most visible in the field of sanctions (see the series of articles in NRC). But the same principle applies here: European citizens and institutions should not simply follow Washington’s lead.
This has already been made clear in numerous judgments of the Court of Justice of the European Union. HRIF.EU’s contribution on this issue therefore focuses on breaking the automatic copy-and-paste approach under which European actors continue to apply U.S. sanctions, even though the European Union has its own sanctions list, which should be the governing framework.
Finally, the Union should distinguish clearly between EU law and foreign sanctions regimes. References to targeted financial sanctions should concern sanctions legally applicable under Union law. A major European policy challenge is to disentangle EU sanctions policy and financial infrastructure from automatic dependence on extraterritorial third-country rules.
Practical impact – Human Rights By Design
In short, HRIF.EU proposes a “rights-by-design” AML monitoring model: document why data and interventions are necessary, minimise intrusive measures, keep humans accountable for consequential decisions, test systems for discrimination and false positives, protect essential financial access, and ensure that AML effectiveness is measured not only by what a system detects but also by the harm it avoids.
This trickles down into the following minimum list of actions (for which we provided further suggestions to the AMLA).
- Build fundamental-rights safeguards into monitoring systems from the outset.
- Make automated decisions explainable and reviewable.
- Introduce meaningful human review of automated decisions.
- Carry out a fundamental-rights impact assessment of the AML and KYC policies and evaluate accordingly.
- Prevent discrimination in risk models.
- Distinguish clearly between unusual activity, suspicion and wrongdoing.
- Apply a strict necessity and proportionality test before taking adverse action.
- Protect access to essential payments and services.
- Do not automatically offboard customers who fail or refuse to provide information.
- Apply EU sanctions law rather than automatically importing third-country sanctions.
- Test systems and evaluate in terms of harm, not only detection performance.
Feedback by AMLA
Itś interesting to note that the submission forms of AMLA do not allow a lot of space for analytical considerations. Everyone needs to jump in with detailed suggestions. So we indeed did so, but were wondering: why aren´t they published fully, once we sent them in and agreed to that? We´d like to read everyones submissions and ideas as well.
In any case: given that the prior AML Directives were never evaluated on human rights impact, we do not expect the AMLA to take the EU Charter and our comments on board. In spite of the fundamental rules in Europa, the policy community in Europe does seriously believe that AMLA-R and all the rules are a free pass to infringe on human rights.
They are not. We should integrate the EU charter into the KYC/AML work and respect the EU ground rules as an inherent part of the work to be done.