EU Imposes Stricter Measures on AML/CFT Rules

On the 28th of March 2023, Members of the European Parliament (“MEPs”) from the Economic and Monetary Affairs and Civil Liberties, Justice, and Home Affairs committee approved stricter rules to close existing gaps in anti-money laundering and counter-financing of terrorism (“AML/CFT”) regulations. To this end, the MEPs adopted their position on three draft legislative proposals on the financing provisions of EU AML/CFT policy. This draft legislation consists of the following:

  • The EU Single-Rulebook Regulation – A proposed regulation on the prevention of the use of the financial system for the purposes of ML/TF. Primarily, this regulation expands the list of obliged entities to include crypto-asset service providers and also other sectors such as crowdfunding platforms. To this end, it lays down provisions on due diligence on customers, transparency of beneficial ownership, and on the use of anonymous instruments such as crypto-assets.
  • The 6th AML Directive – The proposed 6th AML Directive contains mechanisms which should be put in place by the national supervising authorities of Member States.
  • The Regulation establishing the European AML Authority (“AMLA”) – The proposed European AMLA will have supervisory and investigative powers to ensure that AML/CFT requirements are complied with.

Damien Carême, co-rapporteur for the AML Regulation, stated that ‘[t]he texts adopted can remedy [loopholes in European legislation] by harmonising legislation across the European Union, and by monitoring sectors and individuals particularly prone to money laundering more closely’.

According to the adopted texts, obliged entities (including banks, assets and crypto-assets managers, and real and virtual estate agents) will be required to verify the identity of their customers. Furthermore, national Financial Intelligence Units, AMLA, and other competent authorities should have access to information on the beneficial ownership, which information is to be held in national central registers. Taking into consideration the recent European Court of Justice ruling, access to beneficial ownership information will not be available to the general public. However, MEPs decided that persons with legitimate interest (including journalists, reporters, and civil society organisations) should be granted access to the register.

Now, the European Parliament will be able to start negotiations following a confirmation during a plenary session to be held in April 2023.

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