Recommendations on Public-Private Information Sharing in the Fight against Money Laundering and Terrorist Financing
Max Planck researcher makes recommendations at UN Security Council for effective cooperation between public authorities and private companies that respects fundamental rights
How can closer cooperation between authorities and the private sector help to better prevent and detect financial crime? Recommendations were developed as part of the European Union-funded research project “Public-Private Partnerships on Terrorism Financing”.
Globalization and digitalization have profoundly changed the relationship between states and the private sector in recent decades. Increasingly, private companies are creating and controlling the spaces in which economic and social interactions take place – for example, on the Internet or in international financial markets. However, this means that these spaces are increasingly escaping state control. “As a result, legislators often have no choice but to task private companies with monitoring these spaces in an attempt to uncover crime,” says senior researcher Vogel. “Very often, however, the private sector also fails in this task.”
The practical limits of such “delegated law enforcement” are particularly apparent in the case of financial markets. Banks and other financial service providers have been obliged to monitor the activities of their customers since the 1990s. “There is therefore a growing consensus at the international level that closer cooperation between authorities and companies is needed to combat cross-border crime,” explains Vogel. Public-private partnerships and similar forms of cooperation generally require the authorities to share relevant information with the private sector so that the latter can detect and prevent criminal misuse of services. At the same time, however, such cooperation raises serious concerns regarding the protection of fundamental rights, as it can call into question the separation between state and private spheres of responsibility, which is a basic premise of the rule of law.
Against the backdrop of this development, a multinational team of experts led by Vogel has spent the last four years developing pioneering recommendations for an EU legal framework for the public-private sharing of information for the prevention, detection, and investigation of financial crime. The recommendations were presented for the first time before the UN Security Council's Counter-Terrorism Committee Executive Directorate in New York.