On 20 July, the European Commission presented a package of legislative measures to tighten EU rules to combat money laundering and terrorist financing in order to improve the detection of suspicious transactions and activities and fill in legislative gaps – key to financial stability and security in Europe.
There are four measures proposed:
- Creation of a new Anti-Money Laundering Authority (AMLA). The new AMLA will be the central authority with two main functions. It will coordinate national authorities to ensure that the private sector correctly applies EU rules, supervising some higher-risk financial institutions operating in the EU. It will also facilitate cooperation between national financial reporting units responsible for other financial institutions, so as to better detect illegal financial transactions of a cross-border nature.
- A Regulation on the fight against money laundering and terrorist financing, which includes directly applicable rules (removing the need for their transposition into the national legislation of Member States) in the areas of Customer Due Diligence and Beneficial Owner.The Regulation includes a list of “obligated entities” subject to these rules, such as, among others, financial institutions, crypto-asset service providers, crowdfunding service providers, mortgage credit intermediaries, and consumer credit providers that are not financial institutions. There are increased requirements for beneficial ownership, and cross-border registration and access to bank account information.
- A sixth Directive on combating money laundering and terrorist financing, which replaces the current Directive (EU) 2015/849 (Fourth Money Laundering Directive, as amended by the Fifth Directive), with provisions to be transposed into national law, such as the rules on national supervisors and financial intelligence units of Member States.
- A recast of the 2015 Regulation on transfers of funds, applying EU rules in this area to the crypto sector. This is to enable tracking of crypto-asset transfers, to prevent and detect their possible use for money laundering or terrorist financing.
For currency transactions, the Commission proposes to establish a SINGLE LIMIT of EUR 10,000 for cash payments within the EU, though national limits may be maintained below this amount.
As far as the relationship with third countries is concerned, the Commission is already working closely with its international partners to combat money laundering and terrorist financing worldwide. A list of countries will be set up similar to the list of the FATF (Financial Action Task Force), the body that monitors money laundering worldwide, and may include other countries that pose a threat to the EU’s financial system.
These measures will improve the current EU framework by considering the new challenges arising as a result of technological innovation and by filling existing regulatory gaps.
The next step for this draft legislation is debate by the European Parliament and the Council, though we expect these changes to be operational by 2024.
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