EU Commission revamps its AML/CFT rules introducing a package of legislative proposals
On 20 July 2021, the European Commission presented a package of legislative proposals to strengthen the EU's anti-money laundering and countering terrorism financing (AML/CFT) rules. The package also includes the proposal for the creation of a new EU authority to fight money laundering.
The measures improve the existing EU framework by taking into account new and emerging challenges linked to technological innovation. These include virtual currencies, more integrated financial flows in the Single Market and the global nature of terrorist organisations.
The suggested package consists of four legislative proposals:
- A Regulation establishing a new EU AML/CFT Authority.
- A Regulation on AML/CFT, containing directly-applicable rules, including in the areas of Customer Due Diligence and Beneficial Ownership.
- A 6thDirective on AML/CFT (AMLD6), replacing the existing Directive 2015/849/EU (the 4th AML directive as amended by the 5th AML directive), containing provisions that will be transposed into national law, such as rules on national supervisors and Financial Intelligence Units (FIUs) in Member States.
- A revision of the 2015 Regulation on Transfers of Funds to trace transfers of crypto-assets (Regulation 2015/847/EU).
A new EU AML Authority (AMLA) - At the heart of the legislative package is the creation of a new EU Authority which will transform AML/CFT supervision in the EU and enhance cooperation among FIUs. AMLA will be the central authority coordinating national authorities to ensure that the private sector correctly and consistently applies EU rules. AMLA will also support FIUs to improve their analytical capacity around illicit flows and make financial intelligence a key source for law enforcement agencies.
A Single EU Rulebook for AML/CFT- The Single EU Rulebook for AML/CFT will harmonise AML/CFT rules across the EU, including, more detailed rules on Customer Due Diligence, Beneficial Ownership and the powers and task of supervisors and the FIUs. Existing national registers of bank accounts will be connected, providing faster access for FIUs to information on bank accounts and safe deposit boxes.
Full application of the EU AML/CFT rules to the crypto sector - At present, only certain categories of crypto-asset service providers are included in the scope of EU AML/CFT rules. The proposed reform will extend these rules to the entire crypto sector, obliging all service providers to conduct due diligence on their customers. In addition, anonymous crypto asset wallets will be prohibited, fully applying EU AML/CFT rules to the crypto sector.
EU-wide limit of €10,000 on large cash payments - Large cash payments are an easy way for criminals to launder money, since it is very difficult to detect transactions. That is why the Commission proposed an EU-wide limit of €10,000 on large cash payments. This EU-wide limit is high enough not to put into question the euro as legal tender and recognises the vital role of cash.
Third countries - Money laundering is a global phenomenon that requires strong international cooperation. The Commission already works closely with its international partners to combat the circulation of dirty money around the globe. The Financial Action Task Force (FATF), issues recommendations to countries. A country that is listed by FATF will also be listed by the EU.
The legislative package will be discussed by the European Parliament and Council. The Commission looks forward to a speedy legislative process. The future AMLA should be operational in 2024. This package is part of the Commission's commitment to protect EU citizens and the EU's financial system from money laundering and terrorist financing. Ensuring the efficiency and consistency of the EU AML framework is of the utmost importance.
The press release and all the relevant information can be found here.