The Fourth Anti-Money Laundering Directive

15 Sep 2017

 

The Fourth Anti-Money Laundering Directive (the “4th AMLD”) which came into force on the 26th June 2015, recasts the previous third Anti-Money Laundering Directive (the “3rd AMLD”) and takes into account the 40 new recommendations adopted by the Financial Action Task Force (FATF) in February 2012 and to which the Member States have committed to.  The 4th AMLD introduces key changes and amendments as listed below.

 

Scope

 

Firstly, the new directive extends the scope of the 3rd AMLD regime by reducing the threshold for cash traders from €15,000 euro to €10,000 euro irrespective of whether payment is made in a single transaction or a series of linked transactions. Another significant change relates to the fact that the new directive will now apply to the entire gambling sector and not just casinos. In regards to this sector, obliged entities must undertake CDD for single transactions of €2,000 euro or more.

 

Simplified Due Diligence

 

The 4th AMLD remove the automatic entitlement to carry out Simplified Due Diligence only where the customer or product falls within certain categories. Instead, prior to applying SDD measures, obliged entities must first establish that the business relationship or the transaction represents a lower degree of risk.

 

Enhanced Due Diligence

 

A risk-based approach is further evidenced in the new Enhanced Due Diligence (EDD) requirements put forward by the Directive. Indeed, obliged entities dealing with companies in high risk countries are required to undertake EDD measures.  In addition, the ‘white list’ has now been repealed and financial institutions conducting business with non- EU jurisdictions must carry out country-specific risk-assessments.

 

 

Beneficial Ownership

 

The 4th AMLD deals also with the uncertainties regarding the question of who is the beneficial owner. Although the previous threshold for beneficial ownership was not amended (35 percent or more), companies and other legal entities incorporated within an EU-jurisdiction are now obliged to maintain proper records evidencing who the beneficial owners are. Indeed, Member States are required to hold central registers containing adequate, accurate and current information about the beneficial owners of companies and other legal entities, including the details of the beneficial interests held.

 

Conclusion

 

The 4th AMLD aims at implementing stricter requirements and strengthening the defences against money laundering and terrorism financing.  It must be noted that the new directive only lays down minimum standards and therefore MS may impose stricter standards. Therefore, in view of this and taking into account other considerations, a full harmonisation may not be necessarily achieved.

 

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