The European Parliament backed new rules today which would expand European Union law on money laundering to cover the financing of terrorism.
The new proposals, drafted by the European Commission, are seen by the EU executive as a key step in the fight against militant Islamist networks such as al-Qaeda, which carried out the September 11, 2001 attacks on the United States.
Internal Market Commissioner Charlie McCreevy said the new rules provided the EU with "state-of-the-art defences" against money laundering and terrorist financing.
"Not only will the fight against money laundering and terrorist financing benefit from this, but also the integrity and stability of the financial sector," he said in a statement.
Parliament's backing paves the way for EU finance ministers to endorse the new rules when they meet next month.
Money laundering continues to be defined as concealing or disguising profits made from serious crime. But the rules also target financing of terrorism with either criminally or legally obtained money.
The rules are based on EU laws covering laundering the proceeds of serious crimes such as drug trafficking through the traditional financial sector, but also through a number of non-financial market activities such as casinos and art dealing.
They also extend the obligation to report suspicious activities from banks and financial institutions to lawyers, accountants and providers of services for companies and trusts.
Lawyers' organisations had lobbied against their inclusion, citing the principle of lawyer-client confidentiality.
The proposed rules cover anyone dealing in goods and services for cash payments of more than €15,000 and place stricter, more detailed "know your customer" demands on businesses and others.
Banks and credit institutions would have to know and verify the identity of clients. Financial institutions and businesses such as jewellers would also be required to keep records of cash transactions and other evidence for up to five years.