New Anti-Money Laundering Regulation in the EU: A Detailed Overview
January 18, 2024
On 18th January 2024, a significant milestone was achieved in the European Union’s efforts to combat financial crimes. The European Council and Parliament reached a provisional agreement on crucial parts of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) package. This agreement marks the adoption of a new, robust set of measures aimed at tightening the EU’s defenses against money laundering and terrorist financing, including
- a new regulation and
- the 6th AML directive.
These measures aim to close loopholes that have been exploited by criminals and to improve the coordination of national anti-money laundering (AML) systems.
Key Changes Introduced by the New AML Regulation
- Expanded List of Obliged Entities: The new regulation broadens the scope of entities required to adhere to AML obligations. This list now includes not just traditional financial institutions but also crypto-asset service providers, luxury goods traders, traders of luxury cars, airplanes and yachts, and even professional sports clubs. CASPs are now obligated to implement customer due diligence for transactions exceeding €1000.
- Enhanced Due Diligence: The regulation introduces stricter due diligence measures for high-risk transactions and business relationships. This includes more rigorous checks for cross-border correspondent relationships among crypto-asset service providers and financial institutions engaging with high-net-worth individuals.
- Cash Payments Limits: A significant change is the introduction of an EU-wide maximum limit of €10,000 for cash payments. For transactions between €3,000 and €10,000, entities are mandated to identify and verify the identity of the customers.
- Beneficial Ownership: The regulation makes the rules on beneficial ownership more harmonized and transparent. This includes clarifying the distinction between ownership and control and requiring the identification of both. Additionally, the regulation sets a 25% threshold for ownership and captures beneficial owners in complex ownership structures, such as trusts and shell companies.
- High-Risk Third Countries: Enhanced due diligence measures are now required for transactions involving high-risk third countries, adding an additional layer of security against international financial crimes.
Key Changes Introduced by the 6th AML Directive
- Beneficial Ownership Registers:The directive requires member states to establish central registers of beneficial ownership information. This information will be accessible to supervisory and public authorities, obliged entities, and persons of the public with legitimate interest.
- Real Estate Registers:The directive ensures that real estate registers will be accessible to competent authorities through a single access point.
- Increased powers of FIUs: The directive strengthens the powers of financial intelligence units (FIUs), which are responsible for receiving and analyzing suspicious activity reports. This includes providing FIUs with immediate and direct access to a wider range of information include tax information, information on transfers of funds, crypto assets etc.
- Supervisors: The directive sets out new requirements for the supervision of obliged entities, including the introduction of “supervisory colleges”.
- Risk Assessments: The directive emphasizes the importance of risk assessment on both, a European level and on a national level, in the fight against money laundering and terrorist financing. The European Commission will conduct an assessment at EU level to identify the money laundering and terrorist financing risks throughout the EU and will draw up recommendations to member states on measures to be followed.
Once finalized, the texts will be presented to member states’ representatives in the Committee of Permanent Representatives and the European Parliament for approval. If approved, the Council and Parliament must formally adopt the texts before they are published in the EU’s Official Journal and enter into force.
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