[Newsflash n. 52]
The 5th AML Directive (“5AMLD” partially amending Directive (EU) 2015/849) has now been agreed and adopted by European Parliament as of 19 April 2018. The date of entry into force is set to be imminent (between Juy and September 2018) but has not yet been released. The purpose of this amend being to control use of the financial system for the purposes of money laundering or terrorism financing. Member States have 18 months from date of entry into force to be fully compliant and transpose the Directive into National Law.
The 5th AML Directive aims at enacting the following main changes:
- Extending the scope of persons subject to the anti-money laundering verification and counter terrorism financing requirements (in particular to address terrorism financing risks linked to virtual currencies and anonymous prepaid cards and the constant technological evolutions in payments:
- This extension in scope means AML regulations are being broadened to cover custodian wallet providers, all manner of virtual currencies and currency exchange providers, traders of works of art and even their intermediaries;
- Along with auditors, external accountants and tax advisors, any person that undertakes to provide (directly or indirectly or by means of other persons) material aid, assistance or advice on tax matters as principal business or professional activity will be subject to the regulation;
- Thresholds for payments and electronic money products have been significantly lowered – for example for electronic money products, the maximum monthly transaction limit below which Member States may exempt obliged entities from the application of customer due diligence requirements has been lowered from EUR 250 to EUR 150.
- Enhancing customer due diligence measures (in particular in the context of financial transactions involving high-risk third countries):
- Identification can now take place remotely and electronically;
- Wider audit requirements and record keeping requirements when considering PEPs;
- Harmonisation of application of the regulation to high risk third countries so that all Member States are in line and carry out the same stringent levels of due diligence and similar levels of risk-based approach where commercially necessary.
- Increasing transparency measures to Beneficial Ownership registers and through central registries of bank and payment accounts holders at Member State level:
- A key change adopted through the 4AMLD was the requirement for beneficial ownership registers, whereby member states will be required to obtain and hold adequate, accurate and current information on corporate and other legal entities, including trusts and similar legal arrangements, incorporated or administered within their respective member state.
- Public access will be granted for those individuals or organisations that demonstrate a legitimate interest in the beneficial ownership information. EU Member States may choose to broaden access in their national laws (e.g. public access for transparency); however, access to register information must be granted within 18 months of implementation.
- Enhanced powers for the relevant supervisory authorities and EU financial intelligence units.
- Full details for this are yet to published but essentially require that Intelligence Units will be given full rights of access and audit on a timely basis upon request, even where suspicious activity has not been reported.