The Fifth EU Anti Money Laundering Directive provides for the first time for the inclusion of exchange platforms for virtual currencies and digital wallet providers in the group of obliged entities under money laundering law. In addition, new requirements are imposed on the group of obliged entities. This concerns, among other things, the restriction or stricter monitoring of transactions in so-called high-risk third countries. The right to inspect the transparency register introduced by way of the Fourth EU Anti Money Laundering Directive is supposed to be expanded. In addition, a new electronic system is supposed to be established that allows for the identification of persons authorised to dispose of bank accounts and safe deposit boxes.
The European Commission, the European Parliament and the Council of the European Union agreed on the amendment of the Fourth EU Anti Money Laundering Directive (the Fifth EU Anti Money Laundering Directive) on 15 December 2017. It is assumed that the Directive would be published in the Official Journal of the European Union in the middle of 2018. The Member States would have 18 months to transpose the Directive into national law. Therefore, it is to be expected that the Directive will come into force in the end of 2019.
Treatment of virtual currencies
In the future, the obligations under money laundering law are to be imposed for the first time also on exchange platforms for virtual currencies such as Bitcoins and the providers of digital wallets for virtual currencies. In this context, electronic exchange offices where virtual currencies can be changed into fiat money and the other way round are considered exchange platforms. Digital wallets provide accounts that are denominated in virtual currencies and via which payments in virtual currencies can be rendered and received. It is doubtful whether these provisions are suitable to put an end to money laundering using virtual currencies, because virtual currencies can still be exchanged between private persons without any monitoring.
Activities in high-risk third countries
The Directive requires the Member States to impose by statute stricter requirements on dealing with high-risk third countries. Iran, Iraq and Syria, for example, are currently considered high-risk third countries. Among other measures, the requirements for business partner checks will be increased and the commencement of contractual relations will be made subject to the prior consent of the management of the customer from the third country.
Furthermore, the Member States are supposed to impose statutory regulations to prohibit the establishment of branches or subsidiaries in high-risk third countries by obliged entities under money laundering law or at least to impose a clearly increased duty to monitor the work of their branches and subsidiaries on them. It remains to be seen which route the lawmakers of the individual Member States will take in this regard.
Broadened right to inspect transparency register
The right to inspect the transparency register introduced by way of the Fourth EU Anti Money Laundering Directive has been subject to proof of a legitimate interest so far. In the future, a legitimate interest in the inspection will no longer be required. In principle, everybody is intended to be entitled to access the name, month and year of birth, the state of residence and the nationality of the beneficial owner and to obtain information about the "nature and size" of the beneficial ownership. The Directive still provides for the option for the beneficial owners to exempt their data from inspection if such inspection puts them at considerable risk – such as becoming the victim of a criminal offence. However, the Member States are required to approve such exemptions only after a detailed review of the individual case.
Moreover, the Member States are supposed to introduce a new central electronic system that allows for the identification of every natural or legal person holding or controlling a bank account or a safe deposit box. Supervisory authorities are intended to obtain unrestricted access to this register in order to perform their duties.