By Andrew Lambe, 6th Mar 2018
On the 15 December 2017, The Council of EU and the European Parliament reached an agreement on the 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. Following the agreement, EU member states will have until mid-2019 to implement AML5D 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 records of their beneficial ownership. Individual Member States are also required to maintain accurate and current information on corporate and other legal entities as well as Trusts. The main provisions of the AML5D will bring enhanced regulation and includes the following:
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 centralised and automated information-sharing between states.
EU citizens will be given access to beneficial ownership records without a requirement to prove ‘legitimate interest’.
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.
There will be an extension to the anti-money laundering legislation for 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.
‘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.
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 18 months 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 firstname.lastname@example.org.
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