What does market regulation have to do with the formation of an EU policy Area of Freedom, Security and Justice (AFSJ), a domain so inherently connected with human rights protection and constitutional safeguards? After all, the hallmark of the AFSJ project is that of the suppression of crime, terrorism and of ensuring a high level of security throughout Europe, far removed from the essentials of the EU internal market and its insistence on economic freedoms. The AFSJ represents the new site for the fight against the financial crisis and asks fundamental questions as to how the EU could fix the crisis through a tough on crime strategy. So the internal market is not the only market around. Financial crimes hamper the construction of a “clean” market. And consequently that market needs fixing.
In a recent paper published in German Law Journal entitled “Constructing Europe’s Area of Freedom, Security, and Justice through the Framework of ‘Regulation’: A Cascade of Market-Based Challenges in the EU’s Fight Against Financial Crime”, I set out to test how the market theory template can be embedded into the context of the AFSJ. Unsurprisingly, perhaps, I argue that this cannot be done without difficulties, as the AFSJ sphere deals with not traditional economic freedoms such as the free moment of goods or services, but with criminal law, security related questions as well as individual safeguards. However, somewhat unexpectedly the argument shows that the AFSJ offers a fascinating exercise in what it means to refer to regulatory powers in the contemporary EU legal and political debate.
Against the backdrop of the EU as an experienced regulator within the internal market, the phenomenon of the financial crisis offers a particularly useful and interesting test case for legal regulatory challenges in the AFSJ context. The paper serves the purpose of critically examining EU regulatory efforts in the EU anti-crime and security domain of the AFSJ, by focusing on anti-money laundering legislation and the fight against cybercrime as examples of recent financial crimes legislation, which has been enacted, specifically, as part of the tactic of fighting the financial crisis. As this field involves different layers of EU policy areas, it is necessary to take a step back and emphasize the hybrid dimension of the AFSJ. I do this, firstly, by offering a critique of the current state of play in the EU’s fight against financial crimes with regard to the internal market, AFSJ law as well as the external effects of EU actions. Secondly, the paper looks at three areas: the proposal for the Fourth Money Laundering Directive, EU Cybercrime and the European impact of global sanctions against piracy.
The article shows that although, the financial crimes sector ought simply to be part of the AFSJ mission: Fighting crime, it has a greater regulatory impact than that. The EU relies on the internal market provisions for harmonization creating as it does a complicated double system of non-criminal law sanctions on the one hand and criminal law sanctions on the other. Whilst the paper mainly discusses regulatory issues, it cannot be denied that the fundamental rights dimension is perhaps the most important question for the future. International agreements in EU criminal law and multilateral cooperation might be needed to fight crime effectively. Yet the challenges it poses and how the rights of the individual can be upheld in the increased focus on effective rule making poses conundrums for the future. The Fourth Money Laundering Directive and the EU Cybercrime measure take one giant step further as an example of regulatory powers in the EU machinery of financial regulation with consequences inside and outside Europe (the EU’s relation to third states) while making the Member States its local policemen.
Ester Herlin-Karnell’s article “Constructing Europe’s Area of Freedom, Security, and Justice through the Framework of ‘Regulation’: A Cascade of Market-Based Challenges in the EU’s Fight Against Financial Crime” has been published in German Law Journal Vol 16. (2015). pp. 49-74.
Access to the article is available here.