On 17 December 2014, the European Parliament and the Council reached an agreement on the Fourth Money Laundering Directive (the "Directive"). The initial draft dates back more than two years (5 February 2013). The Directive still needs to be endorsed by EU institutions during the course of 2015. The main modifications regard an enhancement of compliance measurements. These includeinter alia:
1 Extension of the scope of the Directive
1.1 The threshold for traders in high value goods dealing with cash payments will be reduced from EUR 15,000 to 7,500 in case occasional transactions are carried out. High value goods would be cars, jewellery, art, watches at the like.
1.2 The scope of the Directive will in future include "providers of gambling services", when carrying out occasional transactions amounting to EUR 2,000 or more, regardless of whether the transaction is carried out in a single operation or in several operations that appear to be linked. Thus, casinos, lotteries and other gambling service providers are covered by the AML obligations.
2 Risk-based approach
2.1 The obliged entities will be required to identify, understand and mitigate the risks facing them. Internal policies, procedures and controls, including customer due diligence, reporting, record keeping, internal control, and compliance management including (when appropriate to the size and nature of the business) the appointment of a compliance officer at management level, have to be implemented.
2.2 Further, the obliged entities will be required to obtain approval from senior management for the policies and procedures they put in place, and shall monitor and enhance the measures taken, where appropriate.
2.3 When appropriate with regard to the size and nature of the business, an independent audit function to test internal policies, procedures and controls must be established.
3 Simplified and enhanced customer due diligence
3.1 The identification of the beneficial ownership of companies and trusts is intended to be simplified through access to a newly created register of ownership information. Legal persons will have to hold information on their own beneficial ownership. For legal arrangements, trustees are required to declare their status when becoming a customer and information on beneficial ownership is similarly required to be made available to competent authorities and obliged entities. The Directive proposes that registers provide for certain safeguards including the provisio that only the designated persons and competent authorities will be permitted access to the registers.
3.2 The Politically Exposed Person (PEP) regime will be extended to cover domestic PEPs and persons entrusted with prominent functions by international organisations. The establishment of a PEP-list on EU level with limited access is planned.
3.3 The automatic entitlement to apply Simplified Customer Due Diligence (Simplified CDD) when dealing with specified customers and products will be removed.
The Directive includes more requirements for designated persons to adopt policies and procedures. Those designated companies with larger structures and cross-jurisdictional aspects to their operations must consider employing greater compliance resources to meet these requirements.