By Andrew Lambe, 6th Mar 2018 (Updated 17th August 2018)
On 19 June 2018 the Council of EU and the European Parliament have entered text into the Official Journal of the EU on the agreed 5th Anti-Money Laundering Directive (AML5D). This is an interesting development given that the 4th Anti-Money Laundering Directive (AML4D) still hasn’t to date, been fully implemented and commenced into Irish law. The AML5D agreement entered into force on 9th July 2018 and EU member states will have until 10 January 2020 to implement into national legislation. These efforts are aimed at strengthening the fight against money laundering and terrorist financing, as well as preventing the unlawful movement of funds and assets.
AML4D requires businesses to hold and maintain internal records of their beneficial ownership since 15th November 2016. The second requirement of AML4D is that Individual Member States are also required to maintain current information on corporate and other legal entities.
The main provisions of the AML5D will bring enhanced regulation for the following items:
Member States will need to take steps to verify the ownership information that is submitted to their beneficial ownership registers. Beneficial ownership records will need to be obtained and made fully transparent, implementing central registers for automated information-sharing between states. Competent authorities and Financial Intelligence Units (FIUs) within member states will be granted high-level access without restriction to the registers’ data.
To further improve the maintenance of accuracy of the information contained in the registries EU citizens will be granted low-level access to the beneficial ownership records without a requirement to prove ‘legitimate interest’.
In Ireland the CRO have established the Central Register of Beneficial Owners however, it is not yet live due to the requirement for levels of access.
Purchasing of pre-paid cards
The threshold for identifying customers will be lowered from €250 to €150 as part of the due diligence requirement covered by AML5D legislation. Customer due diligence measures will also be required for some remote payment transactions in amounts exceeding €50.
There will be an extension to the anti-money laundering legislation for entities who hold, store and transfer virtual currencies; customer due diligence for cryptocurrencies is to be maintained however, these currencies will not hold legal tender status.
An extension of the directive will cover a range of professional industries including; tax advisory services, letting agents, art dealers, digital wallet providers and virtual currency exchange service providers. These entities must practice customer due diligence and report suspicious activity to the Financial Intelligence Units (FIU).
‘High-risk third countries’ will be more strictly defined by the European Commission when assessing whether third countries pose an increased risk of money laundering. Enhanced Due Diligence (EDD) will be required regarding transactions between natural persons and legal entities established in third countries.
European ‘Politically Exposed Persons’ are required to meet the same customer due-diligence obligations as PEPs from outside the EU and third countries.
Centralised Bank Registers
Member States will be required to establish centralised bank account registers or retrieval systems to identify account holders. The EU Commission will ensure the technical aspects are in place to allow interconnection of the registers or systems.
Enhanced Power of FIUs
The EU Financial Intelligence Units will have high-level access to information through the centralised bank account registers or data retrieval systems. This will allow the FIU and other competent authorities of various EU countries to cooperate more easily.
Cooperation of Financial Supervisory Authorities
The 5AMLD will further enhance the exchange of information between financial supervisory authorities including; money laundering supervisors, financial supervisory authorities and the European Central Bank. A joint working group to support cooperation and exchange of information has already been set up to alleviate the risks money laundering can pose to the financial stability of a bank.
The increased regulation and strict scrutiny brought in by the AML5D is the EU’s response to recent world events including the terrorist attacks in Paris (2015) and Brussels (2016), as well as the Panama Papers leaks. The success of the AML5D is heavily weighted on cooperation and information sharing between the Member States. The Council of EU and the European Parliament will now give the Member States until 10 January 2020 to transpose the agreement into national law.
It is important to note that the AML4D requires Irish companies to maintain an Internal Register of Beneficial Owners. For more information or assistance on creating and maintaining your register of ultimate beneficial owners, for assistance with ensuring your company is AML compliant please contact our compliance team on +353 1 6461625 or email email@example.com.