The UK’s Treasury has published a short paper about the European Commission’s proposal to amend the 4th Anti-money Laundering Directive. Here are the headlines:

  • The transposition deadline for the original Fourth Anti-Money Laundering Directive is 26 June 2017. However, the Commission has proposed expediting this to 1 January 2017 for both the original Directive and the amendments
  • The Government intends to implement [the] Fourth Anti-Money Laundering Directive in domestic legislation“, by repealing and replacing the Money Laundering Regulations of 2007
  • Some elements of the [Commission’s] proposals – such as the requirement for Member States to provide public access to information on the beneficial owners of trusts and other legal arrangements – may relate to the right to respect for private and family life and the protection of personal data. The Government will carefully consider the proposals to assess their impact
  • The Government has concerns about [for example, (a)] the proposal to reduce the registration threshold [for persons with significant control] from 25% to 10% for some companies[; (b)] the requirement to register the beneficial owners of all trusts and trust-like legal arrangements and to make this information widely accessible[; and (c)] the requirement to introduce automated centralised mechanisms which allow the identification of any natural or legal person holding or controlling payment or bank accounts
  • The Government is considering the [Commission’s] proposed amendments and will consult on the implementation of the rest of [the] Fourth Anti-Money Laundering Directive in the second half of [2016]
  • The Commission has called for [its proposed] amendments to come into force at the same time as the rest of the Fourth Anti-Money Laundering Directive … This would require transposing the amendments by 1 January 2017, though [the European Banking Authority has criticised this suggestion, and] a large number of Member States have expressed concerns about [it, so] it may be liable to change

If asked to read between the lines, I’d say that this probably means that:

  • We should expect the Commission’s proposed amendments to the 4th Anti-money Laundering Directive to change – although not to such an extent that it will no longer apply to crypto-currency exchanges and wallet providers
  • We may also find that Directive implementation is bifurcated – this might mean transposing the unamended Directive into UK law, and bringing that into force by 1 January 2017 (ambitious – but possible), with the Commission’s amendments to be agreed at a European level, and transposed into UK law afterwards, but other other approaches are possible
  • The Commission’s attempt to expedite transposition of the unamended Directive, and to introduce amendments, is likley to mean that different Member States will switch the Directive on at different times, and in different ways
  • If the Government can’t persuade the Commission to change some of its proposed amendments, it may try to “under-implement” the amended Directive (if it can find a defensible way of doing so). Either way, the UK is unlikely to lower its AML standards post-Brexit, even if it’s free to do so at that stage