The European Commission has adopted a proposal to further reinforce EU rules on anti-money laundering to counter terrorist financing and increase transparency about who really owns companies and trusts.
It highlighted the need for the EU to take further measures and step up its fight against money laundering and terrorism financing in light of the recent terrorist attacks and the Panama Papers revelations.
On 5 July 2016, the European Commission adopted a proposal for amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the “4th AMLD”).
The proposal sets out a number of measures to better counter the financing of terrorism and to ensure increased transparency of financial transactions and of corporate entities under the 4th AMLD currently in force.
The problems identified are, among others:
- unclear and uncoordinated customer due diligence requirements, resulting in less efficient monitoring of suspicious transactions involving high-risk third countries;
- suspicious transactions made through virtual currencies not being sufficiently monitored by the authorities;
- insufficient measures to mitigate risks associated with anonymous prepaid instruments;
- limitations in ensuring that Financial Intelligence Units (“FIUs”) have timely access to – and exchange of – information held by obliged entities;
- FIUs’ lack of access, or delayed access, to information on the identity of holders of bank and payment accounts.
The proposed measures aim to:
- ensure more legal certainty for obliged entities as regards the enhanced customer due diligence measures which need to be applied in relation to high-risk third countries (these defined under EC policy in the recently adopted list of high-risk third countries);
- bring virtual currency exchange platforms and custodial wallet providers under the scope of the 4th AMLD;
- set in place a coherent, uniform scheme for the registration of beneficial ownership information of all trusts set up in the EU;
- require Member States to disclose, via a register, beneficial information for companies and business-type trusts and other similar legal arrangements, while retaining the necessity to demonstrate a legitimate interest for access to that information in respect of trusts and other legal arrangements that do not qualify as business-type entities;
- enhance transparency of beneficial ownership of corporate and legal arrangements;
- strengthen transparency measures applicable to prepaid instruments, such as prepaid cards, by prohibiting anonymity for their online use and lowering thresholds for identification from €250 to €150 when used face-to-face and widening customer verification requirements;
- strengthen the powers of FIUs’ access to – and exchange of – information of obliged entities;
- put in place an automated central mechanism – such as a central registry or an electronic data retrieval system – at Member State level, allowing for the swift identification of account holders or controllers; and
- give FIUs access to centralized bank and payment account registers or electronic data retrieval systems.
Companies, trusts and finance operators will have to ensure continuous up-to-date compliance in the Member States to keep in line with more and more invasive legal provisions and thoroughly complex requirements in order to avoid administrative and criminal sanctions.
As yet, not all Member States have transposed the 4th AMLD. According to the EC’s information, all Member States intend to implement the 4th AMLD by the end of 2016.
However, the 4th AMLD is still not transposed under Luxembourg law and no draft bill currently exists and, according to recent government information, implementation into national law is planned to be carried out by June 2017, the formal implementation deadline for Member States.