On 20 May 2015 the European Parliament voted on new EU anti-money laundering (AML) rules, namely the Fourth AML Directive (AMLD) and a new Regulation on information accompanying transfer of funds (AMLR). The adopted measures replace the existing AML Directive and Regulation and have the primary aim of strengthening EU defences against money laundering and terrorist financing in line with international standards (i.e. the Financial Action Task Force Recommendations).
The main elements of these rules are:
- Mandatory central registers of information on ultimate ‘beneficial owners’ of corporate and other legal entities, as well as trusts are introduced; the registers will have to be accessible not only to the authorities and financial intelligence units (without any restriction), but also to ‘obliged entities’ (such as credit and financial institutions for the purpose of fulfilling their duties under the AMLD despite the fact that they will not be allowed to rely solely on the information obtained from the registers) and – except for information concerning trusts – to anyone able to demonstrate a ‘legitimate interest’ (e.g. journalists);
- Additional precautions are required when dealing with all (not only foreign) ‘politically exposed persons’ (i.e. people at higher than usual risk of corruption, such as heads of state and their family members);
- The scope of the AMLD has been extended (by a reduced cash threshold) to include a greater number of persons trading in goods and now also covers all providers of gambling services;
- Tax crimes punishable by imprisonment or by a detention order for a maximum of more than one year (or more than six months for Member States that have a minimum threshold for offences in their legal system) now fall under the definition of predicate offences for money laundering;
- The risk-based approach for customer due diligence has been reshaped; this concerns the obligation of ‘obliged entities’ (banks, auditors, lawyers, real estate agents, among others) to check the identity of their customers and to report suspicious transactions;
- New and increased administrative sanctions have to be implemented by Member States for serious, repeated or systematic breaches of requirements under the AMLD, such as pecuniary sanctions in the amount of at least twice the amount of the benefit derived from the breach or at least €1m (where the obliged entity concerned is a credit or financial institution, this figure rises to at least €5m or – in the case of a legal person – 10% of the total annual turnover);
- The AMLR introduces new requirements for traceability of fund transfers, including information on the payee (and not only the payer).
The AMLD will enter into force 20 days after its publication in the EU Official Journal (due for around June-July 2015). A process to guide Member States in implementing the Directive into national law will be put in place by the European Commission over the coming months (the implementation period is two years); the AMLR will be directly applicable 20 days after its publication.
These new rules enter into force after long and intensive discussions between the stakeholders. It was the clear intention of the EU legislator to introduce tougher rules on money laundering to combat tax evasion and terrorist financing. And in particular, the central register was only introduced at a relatively late stage in the legislative process by Members of the European Parliament. It is to be noted that the AMLD has yet to be transposed into national law. Thus, stakeholders should closely monitor this process and use any opportunity to raise concerns that have not been addressed so far.