On 5 June 2015, the Fourth Anti-Money Laundering Directive (“AML IV”) was published in the Official Journal of the European Union. AML IV came into force on 26 June 2015 and Member States will have until the 26 June 2017 to transpose it into their national laws.
AML IV aims to strengthen EU rules against money laundering and to ensure consistency with the approach followed at international level.
Key Amendments to the Existing Regime
- Extension of scope – AML IV introduces requirements which will increase the number of traders caught by its scope. AML IV proposes to reduce from €15,000 to €10,000 the cash payment threshold for traders in goods. It also expands on the scope of rules relating to the gambling sector and will include providers of gambling services and not just casinos as provided for in the Third Anti-Money Laundering Directive.
- Application of a risk-based approach – Member States will be required to provide guidance on how to assess and identify risks.
- More restrictive rules on customer due diligence – Obliged entities, the new name for designated persons, such as credit institutions and investment firms conducting customer due diligence will be required to take enhanced measures in respect of customer due diligence where the risk of money laundering is greater and can take simplified measures where the risk of money laundering is less.
Provisions are contained in AML IV which will oblige Member States to keep central registers of information on the ultimate beneficial owners of corporate entities and trusts.
The registers will be accessible to regulatory authorities and their financial intelligence units, obliged entities and the general public. To gain access to the registers, a person will need to demonstrate a legitimate interest in the stored information.
AML IV specifies a number of sanctions to penalise obliged entities who fail to meet their anti-money laundering obligations.
AML IV provides for a maximum financial fine of at least twice the amount of the benefit derived from the breach of AML IV or at least €1 million.
For breaches involving credit or financial institutions, AML IV provides for a maximum financial sanction of at least:
- €5 million or 10% of the total annual turnover in the case of a legal person; or
- €5 million in the case of a natural person.