The European Commission’s 4th AMLD (Anti Money Laundering Directive), has now been implemented to protect against money laundering and the financing of terrorist activity.
But new amendments have already been proposed in what has become known informally as the Fifth Anti Money Laundering Directive, designed to strengthen the compliance of 4AML in light of the recent terrorist attacks in Europe and increase in virtual financing.
1. Benefit Ownership Registers
The 4th AMLD requires businesses to hold beneficial ownership records. Therefore, anyone who enjoys the benefits of ownership, even though title to the property is in another name, must be declared.
Under 5AMLD, it has been proposed that EU citizens be granted access to these registers without having to demonstrate “legitimate interest”, to improve transparency about the ownership of companies and trusts.
2. Virtual Currencies
The definition of “obliged entities” required to practice due diligence in 4th AMLD included financial institutions, accountants, tax advisors, and other tangible groups. 5th AMLD brings virtual currency platforms and wallet providers into the scope of the directive, responding to the huge growth in the use of virtual currencies and Fintech in general.
3. Prepaid cards
5AMLD proposes that the anonymous transaction limit on prepaid cards be reduced to €50, with higher value transactions requiring full identification of card holders.
4. Broader Information Sharing
Wading through red tape and administrative hurdles means that Financial Intelligence Units can find it hard to access crucial information quickly. Delays like this can prevent critical action being taken in the case of money laundering or terrorist activity. The latest proposals suggest that Member States must create an automated and centralised system or a central register, giving full unrestricted and efficient access to any information which could assist them.
5. Enhanced Due Diligence
Under 4AMLD, firms must carry out checks on their customers identities by completing basic company searches and/or checking ID to protect against corruption. 5AMLD proposes an improvement on checks for high risk third world countries, who many not have adequate AML strategies in place.
These changes are due to be discussed within EU parliament in October 2017 and timing of the proposed changes will be dependent on an agreement being reached.