11 Jul What is the Fifth EU Anti-Money Laundering Directive? 5MLD (5AMLD)
On June 19th, 2018, the fifth EU Anti-Money Laundering Directive (AMLD 5) was published in the official journal of the European Union. The AMLD5 provides additional inputs to the Fourth Anti-Money Laundering Directive (AMLD4) released only in 2015. The AMLD 5 entered into force on July 9th, 2018. Member states are required to transfer the modified regulations into national law by the latest January 10th, 2020.
Let’s look at the AMLD5 in detail:
Virtual currencies / Cryptocurrency Exchanges
5AMLD will be applicable to virtual currency exchange service providers and electronic wallet providers to reduce the risk of non-compliance with virtual currencies like Bitcoin, Litecoin, Ethereum and other digital currencies. Professional services providers like auditors, accountants or tax advisors will also be in the scope of the AMLD5. Furthermore, traders of art will be obliged parties to the extent they trade at values above 10.000 Euros.
Public access to beneficial ownership information
The beneficial ownership information created under the AMLD4 will be made accessible to the general public. The need to show a genuine interest for access will be eliminated except for trusts and similar legal arrangements. In that case, access to beneficial ownership information will be granted to any natural or legal person that can demonstrate a legitimate interest. Access will comprise, as a minimum: the beneficial owner’s month and year of birth, country of residence, nationality, and the nature and extent of the beneficial interest held. Member states must implement mechanisms to ensure that information in those registers is accurate and up to date and apply effective sanctions in cases of breach.
PEP-Lists
Member states will be required to outline a list of offices and functions that qualify as politically exposed (PEP) on the national level and including nationally registered international organizations; the EU will draft a corresponding list on EU level, consolidate the national lists from member states and publish the result.
High-risk third countries
The EU will produce a list of high-risk third countries where obligated entities will have to carry out Enhanced Due Diligence (EDD)
Bank account and safe deposit box regulations
Anonymous bank accounts, savings accounts or safe deposit boxes will be abolished with the AMLD5. The Member States must create central registries or central electronic data retrieval systems by latest 10 September 2020, which allow the timely identification of any natural or legal person holding or controlling bank or savings accounts and safe deposit boxes. This information will be directly accessible by Financial Intelligence Units (“FIUs”) and national competent authorities.
Access to Information on Holders of Real Estate
Information on real estate ownership by any natural or legal person will be made centrally available for public authorities; this does not require the creation of a central real estate register. Alternatively, electronic data retrieval systems can be used.
Thresholds for Prepaid Cards and E-Money transactions will be lowered
The threshold for identifying holders of prepaid cards will be lowered from 250 Euros to 150 Euros. E-Money Online transactions with prepaid cards will be limited to max 50 Euros. Members states are free to lower the amounts further but not increase under any circumstances.
Enhancing cooperation and information sharing among EU Financial Intelligence Units (FIUs)
5AMLD requires member states to establish centralised automated mechanisms in place at the national level to identify payment accounts and bank accounts held by a credit institution, thereby developing a central source to identify all bank accounts for an individual person, making it easier for EU FIUs to share information. 5AMLD has given a free hand to the member states to ascertain and develop a central registry or data retrieval systems.
The revisions introduced in the 5AMLD are set out with a goal towards a uniform and orchestrated approach across EU member states in mitigating ML and TF within the financial system. Simultaneously, the proposed amendments will further align the EU’s AML and CTF laws to the FATF AML recommendations, highlighting a move towards a more global approach to seizing financial crime.
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