The Fourth Money Laundering Directive (4MLD) of the European Union has been endorsed by two key European Parliament committees, which now means that EU countries must implement the changes within two years (i.e., it is anticipated to come into effect in early 2017).
The European Parliament and the EU Council of Ministers struck a deal in December 2014 and this was endorsed by both the Economic and Monetary Affairs and Civil Liberties committees of the European Parliament in Brussels by a significant majority vote of 87 “for” and two “against.” The 4MLD will replace the European Union’s Third Money Laundering Directive and will:
- introduce a risk-based approach;
- extend the rules for politically exposed persons (PEPs) so that domestic PEPs will be treated in the same way as foreign PEPs, meaning that they will be considered high risk from a due diligence perspective and additional measures will have to be followed to establish the source of their wealth and funds, for example; and
- oblige EU countries to maintain centralized registers detailing beneficial ownership information for companies established within the European Union, with such registers being accessible to regulators, financial intelligence units, banks and persons who have a “legitimate interest” in suspected money laundering (it is not yet clear who such persons might include).
The final full European Parliament vote will be held in March or April 2015 and is now anticipated to be a mere formality.
For the most up-to-date draft of the 4MLD text click here.