POLICY CONSIDERATIONS ON VOLUNTARY DISCLOSURE AND DISCLOSURE OBLIGATIONS – BETWEEN A ROCK AND A HARD PLACE
Internationally, monitoring suspicious activity has become the routine occupation of entire departments at banks and other financial institutions, as well as government authorities. Over 20 years ago, heated debates raged – largely to no effect. At present, European anti-money laundering (AML) laws continue to extend disclosure obligations by, firstly, increasing further and further the number of those obliged to disclose certain activities, and secondly, broadening the definition of money laundering again and again.
According to German lawmakers, in the future money laundering will include even the most minor predicate offences. The originally advertised objectives – combating the financing of terrorism and organised crime – seem more and more a pretence for controlling the entire population’s financial decisions.
Similar reporting obligations also exist under capital market laws, which, not by coincidence, is another legal area shaped by European law. For example, the EU Market Abuse Regulation obliges intermediaries to “report orders and transactions, including any cancellation or modification thereof, that could constitute insider dealing, market manipulation or attempted insider dealing or market manipulation to the competent authority of the trading venue without delay”. Therein lies the dilemma to be discussed in this article.
For classification purposes, it is important that these developments constitute exceptions under the rule of law. For instance, German core criminal law imposes an obligation to report to state authorities criminal offences committed by third parties only under narrowly defined preconditions. That obligation arises where the gravity of the infringement is considerable (e.g., high treason, murder or extortion under threat of force) and applies exclusively to future acts. There is wide consensus that this reporting obligation is legitimate out of ‘solidarity with our fellow man’.
Apr-Jun 2020 issue
Hengeler Mueller