The European Commission has unveiled a comprehensive and ambitious legislative package designed to strengthen the European Union’s anti-money laundering and counter terrorism financing (AML/CFT) rules. This initiative is part of the Commission’s commitment to safeguarding EU citizens and the financial system from the threats posed by criminals using existing legislative loopholes to commit complex financial crimes.

The AML package was first introduced on July 20, 2021 and consists of 4 legislative proposals:

1. Regulation establishing the new Anti-Money Laundering Authority (AMLA)

The creation of a new central European authority, the Anti-Money Laundering Authority (AMLA), is the centerpiece of the AML Package. The AMLA will have direct supervisory powers over certain types of high-risk financial institutions (the selected obliged entities) in several EU member states.

The AMLA will also play a supporting role in relation to non-financial sectors, coordinating financial intelligence units (FIUs) in member states and providing recommendations. In other words, the AMLA will not replace national FIUs but will be a key player in supporting them. Additionally, the AMLA will keep an up-to-date, centralized database of information relevant to the AML/CFT supervisory system in the EU.

The AMLA will be based in Frankfurt and begin operations mid-2025.

Read the Proposal here.

2. New Regulation introducing an EU single rulebook on AML/CFT

The AML Package introduces a unified EU single rulebook on AML/CFT through a new AML/CFT Regulation, thus harmonizing rules across the EU. A Regulation must be applied as it is and does not require EU countries to incorporate it into their national laws to be applicable.

The new AML/CFT Regulation includes:

  • a revised list of obliged entities,
  • detailed and harmonized rules on customer due diligence and identification and verification of beneficial owners
  • measures applicable to politically exposed persons (PEPs) and third countries, among others.

Additionally, the Commission proposes an EU-wide limit of €10,000 on large cash payments. Member states will remain free to maintain lower limits at the national level.

The final version of the text has not been adopted yet. The EU Parliament is expected to vote on its final approval in April 2024. The Regulation is expected to apply 3 years after its entry into force.

Read the Proposal here.

3. Directive on AML/CFT: the 6th AML Directive

The 6th AML directive will be replacing the existing 5th AML Directive (Directive 2015/849 as amended).

The new directive contains rules on national beneficial ownership registers, real estate registers, national supervisors, and Financial Intelligence Units (FIUs) in Member States. These rules aim to ensure that obliged entities are subject to adequate AML/CFT supervision.

The final version of the text has not been adopted yet. The Parliament is expected to vote on its final approval in April 2024. Member states will be expected to transpose the Directive into national laws 3 years after its entry into force.

Read the Proposal here.

4. Recast of the 2015 Regulation on Transfers of Funds

The final text of the AML package extends the scope of the 2015 Regulation on Transfers of Funds to include crypto assets. The purpose of this Regulation is to strengthen the EU framework governing exchanges in crypto-assets, thus ensuring transparency, traceability, and preventing their use for criminal purposes.

Under the Regulation, crypto-asset service providers are now required to collect information on the sender and beneficiary of the transfer of crypto assets, regardless of the amount.

The text has been adopted and will be applicable from December 30, 2024.

Conclusion

These proposals, informed by the challenges posed by technological innovation, virtual currencies, and globalized financial flows, represent a significant step toward a more consistent AML/CFT framework in the EU. The texts are now being finalized. If approved, they will be adopted and published in the EU’s Official Journal before entering into force.

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