In a significant move to fortify the EU’s defence against money laundering and terrorist financing, the Council and Parliament have reached a provisional agreement on key elements of the anti-money laundering package. This development is key part of the EU’s revamped anti-money laundering system, aiming to enhance the organisation and collaboration of national systems combating financial crimes.
Harmonised Rules Across the EU:
The provisional agreement marks a ground-breaking shift by exhaustively harmonising rules throughout the EU. This closed any potential loopholes that criminals might exploit to legitimise proceeds through the current regulations.
Expanded List of Obliged Entities:
The list of obliged entities, acting as gatekeepers in anti-money laundering efforts, has been expanded. Notably, the crypto sector is now comprehensively covered, requiring all crypto-asset service providers (“CASP”) to conduct due diligence on transactions exceeding €1000.
Also, other sectors will be included in the new regulations, concerned by customer due diligence and reporting obligations. This will be traders of luxury goods such as precious metals, precious stones, jewellers, goldsmiths, and horologists. Traders of luxury cars, airplanes and yachts as well as cultural goods (like artworks) will also become obliged, as well as professional football clubs and agents and agents in the sector.
Enhanced Due Diligence for Cross-Border Correspondent Relationships and High-Risk Third Countries:
Specific new measures for enhanced due diligence have been introduced for cross-border correspondent relationships involving CASPs as well as high net-worth individuals. Those enhanced due diligence measures will be imposed on transactions and business relationships with high-risk third countries. The Commission of the EU will assess risk based on international standards, and additional countermeasures may be applied.
Cash Payments Restrictions and Beneficial Ownership Transparency:
To curb money laundering, an EU-wide maximum limit of €10,000 for cash payments has been established. Member states can opt for a lower limit if desired. Additionally, obliged entities must identify and verify individuals involved in occasional cash transactions between €3,000 and €10,000. Furthermore, the agreement focuses on more harmonised and transparent rules regarding beneficial ownership, ensuring comprehensive analysis based on ownership and control components. This includes also clarified regulations pertaining to intricate ownership and control structures with multiple layers. This ensures that the practice of concealing behind numerous ownership layers in companies will no longer be effective. Simultaneously, the new regulations will provide clarity on data protection and record retention provisions, streamlining the efforts of competent authorities for enhanced efficiency. The agreement includes a provision for retroactive registration of beneficial ownership for all foreign entities that possess real estate, effective from January 1, 2014.
Anti-Money Laundering Directive, Supervision and Risk Assessment:
The directive emphasises the verification of information submitted to central registers, allowing public access and inspections: aside from supervisory bodies, public authorities, obliged entities, and others, members of the public with a legitimate interest, including the press and civil society, have the right to access the registers. FIUs gain direct access to relevant information and must cooperate closely in cross-border cases.
Adequate and effective supervision of obliged entities is mandated, and a risk-based approach will be applied. Both EU and national risk assessments remain integral, with the Commission conducting an EU-level assessment.
The finalised texts will be presented to member states for approval in the Committee of Permanent Representatives and the European Parliament. Formal adoption will follow, leading to publication in the EU’s Official Journal.
This development is part of the broader legislative proposals presented by the Commission in 2021 to strengthen the EU’s rules on anti-money laundering and countering terrorism financing.
For detailed insights and implications on these new rules, feel free to contact us.