Movement in the EU-wide fight against money laundering
Preliminary agreement on AML package offers prospect of strengthening current rules
In July 2021, we first reported in detail on the European Union (EU) Commission’s legislative proposals to strengthen the EU’s anti-money laundering and counter-terrorism rules (AML package). Last week, the Council and Parliament reached a provisional agreement on parts of the package: although the final texts have not yet been published, the EU Council’s press release of 18 January 2024 makes it clear that the rules will be even tougher.
The agreement now provides for a new anti-money laundering regulation that will incorporate all the provisions applicable to the private sector, thereby harmonising the relevant provisions across the EU for the first time. In contrast to the Regulation, the 6th EU Anti-Money Laundering Directive will lay down rules on the organisation of the institutional system for combating money laundering and terrorist financing.
The main provisions of the Regulation at a glance:
- The EUR 10,000 limit will apply to cash payments throughout the EU, although Member States will be free to set a lower limit. Occasional cash payments between EUR 3,000 and EUR 10,000 will have to be identified and verified.
- The agreement clarifies that beneficial ownership can be based on the components of ownership or control. The threshold for determining beneficial ownership will be 25%, and the agreement also sets out rules for determining complex ownership and control structures to ensure maximum transparency.
- Companies will also be required to apply enhanced due diligence obligations to occasional transactions and business relationships with high-risk third countries, where weaknesses in those countries’ anti-money laundering and anti-terrorist financing regimes threaten the integrity of the EU’s internal market.
- In addition, the list of obliged entities will be extended to include crypto service providers, dealers in luxury goods and professional football clubs and agents. Crypto service providers will also be subject to enhanced due diligence obligations in the case of cross-border correspondent relationships.
The main provisions of the 6th EU Money Laundering Directive at a glance:
- All information submitted to the transparency register must be verified. Links to persons or entities subject to financial sanctions must be outlined.
- The powers of Financial Intelligence Units (FIU) are to be extended by giving them access to financial, administrative and law enforcement information, including tax information. The procedure for suspending or refusing authorisation of a transaction by the FIU concerned will be made more robust to ensure better handling of reports.
- New supervisory measures, so-called supervisory colleges, will be introduced for the non-financial sector.
- Finally, EU-wide and national risk analyses will be carried out, with recommendations being made at EU level and Member States being required to implement the risk mitigation measures identified at national level.
Next steps and outlook
The legislative texts still need to be finalised and submitted to the EU Parliament and the Committee of Permanent Representatives of the Member States for approval. The texts will then need to be formally adopted by the Council and Parliament and published in the Official Journal of the EU to enter into force. While the provisions of the Regulation are directly applicable, the 6th EU Anti-Money Laundering Directive still has to be transposed into national law.
However, it should be noted once again that the EU is consistently driving forward the fight against money laundering and terrorist financing. Companies, including those in the non-financial sector, should take anti-money laundering regulations seriously and use the latest developments as an opportunity to review and adapt their AML compliance. We are here to help!