The 4th Anti-Money Laundering & Terrorist Financing Directive (4AMLD) came into force on 25 June 2015; and the Member States of the European Union are (currently) obliged to transpose it into their national laws by 26 June 2017.
On 12 February 2016, the European Council called on (a) the Commission to propose “targeted changes” to the Directive by the end of June 2016; and (b) the Member States of the European Union to implement the Directive by the end of 2016, instead.
The Recitals to the unamended version of 4AMLD put an emphasis on (a) preventing “the manipulation” of money derived from serious crime; (b) preventing the collection of money or property for terrorist purposes; and (c) enhancing ownership transparency, whenever possible.
To achieve these outcomes, the unamended version of 4AMLD will:
- Politically exposed persons: require relevant firms to carry out enhanced due diligence (a) on domestic PEPs, as well as foreign PEPs; and (b) extend the enhanced due diligence period from 12 to 17 months after a PEP leaves office;
- Cash threshold: reduce the cash threshold for applicability of Directive measures from €15,000 to €7,500;
- Simplified due diligence: make it harder to rely on simplified due diligence;
- 3-tier written risk assessments: create a 3-tier written risk assessment process, pursuant to which the Commission will carry out a written assessment of the money laundering and terrorist financing risk to the EU, whilst the Member States and relevant firms will carry out written assessments of the money laundering and terrorist financing risks to each of them;
- Enhanced beneficial ownership transparency: require every EEA Member State to maintain a central register of the beneficial owners of every corporate entity that has its registered office in that Member State’s territory. To enable this, EEA registered corporates will be required to maintain and file records of their beneficial owners with their local central registry. National competent authorities, national financial intelligence units, and “obliged entities” (such as banks carrying out customer due diligence), will be given unfettered access to these registers. Members of the public will also be able to access these registers if they have a legitimate “public interest” reason for doing so;
- Trusts: require the trustees of express trusts to obtain and hold adequate, accurate and current information about the trust’s settlor, trustees, protector, and beneficiaries (or classes of beneficiaries) and to make this information available to obliged entities; and
- Tax Crimes: make tax crimes predicate offences, and bring tax advice provided by lawyers within the scope of their reporting obligations.
The Commission’s “targeted changes” will include “measures to … have better control of payment forms such as virtual currencies and anonymous pre-paid cards; [the creation of] central registers or data-retrieval systems for bank and payment accounts; [and] central registers or data-retrieval systems for bank and payment accounts…” There’s more information about each of these things in our blog post of 15 February and the Commission’s Road Map of 7 April 2016, which are available here and here.