The House of Commons European Scrutiny Committee (Committee) has just published its 15th Report of the 2016/7 Session. Chapter 4 of the Report includes the Committee’s latest thinking on (what is now regarded as) the 5th Anti-money Laundering Directive (5AMLD).

In July 2016, the European Commission published a proposal for 5AMLD – a Directive that would amend the 4th Anti-money Laundering Directive (4AMLD), with the relevant amendments to take effect before the original deadline for transposing 4AMLD into national law, and requiring “obliged entities” to comply with these laws.

In September 2016, the UK Government told the Committee that:

  1. it supported 5 of the Commission’s 5AMLD proposals, but had reservations about another 3 – the proposals:
    • to reduce the “beneficial ownership of companies” registration threshold from 25% to 10% of the issued share capital for some companies;
    • to register the beneficial owners of all trusts and trust like arrangements, and make this information widely accessible too; and
    • to introduce automated centralized mechanisms which allow the identification of any natural or legal person holding or controlling payment and bank accounts; and
  2. it would try to resolve these concerns during the 5AMLD negotiations that would follow in due course.

Since then the Government has concluded that the law enforcement data sharing provisions in 5AMLD mean that (at least some of) the proposed Directive is a Justice and Home Affairs matter, so the UK can choose whether to “opt-in” (or not). The Government “will be taking an opt-in decision ‘in the usual way’; and unless the legal base is changed, the Government would [only] consider the UK bound by the proposal on adoption of an opt-in“.

So, what does the Committee make of this?

As the Government is very well aware, we share the widely held legal view that it is not possible to exercise the UK’s opt-in in relation to a legislative proposal which does not have a Justice and Home Affairs legal base. Nevertheless, we wish to hear … what the Government’s decision is on this matter … We remind the Government that we also wish to hear about developments in [the] negotiation of the proposed Directive, particularly in relation to the three … aspects of concern it has mentioned to us previously Pending responses on both, [5AMLD] remains under scrutiny.”  

The latest Presidency compromise text of 5AMLD was published a few days ago, and it suggests that the UK Government still has some work to do, if it wants it concerns to be addressed before 5AMLD is made and brought into force. Brexit almost certainly means the Government has rather more to do in this space than might otherwise have been the case – the UK’s influence on these issues is beginning to wane already. It’s not yet clear whether the Government is seeking to rely on the opt-in in response to these difficulties, or by co-incidence. No doubt, this will all come out in the wash.

More to follow …



Posted by Cooley