In an effort to combat money laundering and terrorist financing, the European Union (EU) has developed a comprehensive legislative AML package. The AML package contains an EU Single Rulebook Regulation, a new Directive and a Regulation establishing a new AML Authority.
One key element is the new Anti-Money Laundering Authority (AMLA), which is expected to become operational in 2025. The AMLA will aim to enhance member states' cooperation and standardise the application of AML measures. In this article, we will delve into some details of the AML package to help you prepare for the upcoming changes.
The EU member states have long felt the need for further harmonised legislation, practices, and a common approach to combating money laundering and terrorist financing within the union.
Some of the current challenges with the current legislation include:
Therefore, an anti-money laundering legislative package known as the AML package was developed, which includes rules for:
The AML package consists of three legal acts:
The regulation will apply from mid-2027, and the directive shall be implemented in national laws by mid-2027. The AMLA will start its operations in 2025 and will be located in Frankfurt.
The new Anti-Money Laundering Authority, AMLA, aims to strengthen the EU's defence against money laundering and terrorist financing by enhancing member states' cooperation and standardising the application of AML measures.
Among other things, the AMLA will contribute to:
The European Council will empower AMLA to directly supervise certain types of credit and financial institutions, crypto asset service providers, and non-financial businesses that are obligated under AML regulations.
This includes entities such as real estate agents, lawyers, and accountants. The AMLA's supervision will ensure these businesses adhere to the new regulations and contribute to combating money laundering and terrorist financing.
The Council also requires the authority to supervise up to 40 groups and entities, at least in the first selection process, and to ensure that supervision covers the entire market.
The AML Regulation will harmonise anti-money laundering legislation across its member states, by replacing national legislation under the previous directive with a directly applicable regulation.
The regulation will apply directly to credit and financial institutions, designated non-financial businesses, and specific professions like lawyers and auditors.
The primary goal is to establish a uniform set of rules across the EU that can be more consistently applied and enforced.
The regulation includes detailed provisions on customer due diligence and beneficial ownership and outlines the powers of national supervisory authorities and financial intelligence units.
The objective is to increase the competitiveness of the Member States and accelerate development through harmonised legislation.
The regulations to counter money laundering and terrorist financing will also apply to cryptocurrencies.
According to the legislation, crypto-service providers must conduct due diligence on their customers and report suspicious activity to financial intelligence units.
They must also provide information about the senders and recipients involved in crypto-asset transfers to ensure traceability and prevent suspicious transactions.
The EU will establish a "black list" and a "grey list" of non-EU countries.
The "black list" will include countries with significant deficiencies in their anti-money laundering systems, while the "grey list" will feature countries that have committed to addressing these deficiencies. This measure will allow the EU to take appropriate actions to mitigate the risks posed by third countries. Businesses should be aware of these lists and the implications they may have on their operations, particularly if they have dealings with entities in these countries.
Cash payments will be subject to a maximum EU-wide limit of €10,000, making it more difficult for criminals to launder money.
Financial institutions should closely monitor the legal and technological developments in their areas of activity to keep up with the regulatory requirements. It's crucial for your company to stay ahead of the curve in preparation. You may need to adopt new technological tools for AML compliance, hire staff with specific AML skills, and adjust internal procedures and regulations to meet the new requirements. These preparations will help your institution avoid potential non-compliance issues and maintain a competitive edge.
Adapting to these changes is not only a necessity, but also a strategic move to ensure compliance and maintain a competitive edge.
The AML package and the AMLA are a significant step towards combating money laundering and terrorist financing within the union.
They aim to enhance member states' cooperation and standardise the application of AML measures.
The AMLA will play a crucial role in ensuring that institutions adhere to the new regulations, contributing to the overall goal of preventing illicit activities.
With the AML package expected to apply in 2027, businesses and institutions must prepare to avoid potential non-compliance issues.