EU Ramps Up Money Laundering Battle With New Regs

January 29, 2020

Europe has strengthened the rules to fight money laundering with a new directive that came into force.

The 5th Anti-Money Laundering Directive, updated the latest anti-money laundering (AML) guidelines to help financial entities such as banks and other organizations to apply measures to prevent money laundering and terrorist financing.

For the first time, the changes broaden regulations by including cryptocurrency service providers like virtual-fiat exchanges or custodian wallet providers. The purpose is to see who is making crypto transactions. Overall, the amendments will:

  • Enhance transparency by setting up publicly available registers for companies, trusts and other legal arrangements:
  • Enhance the powers of EU Financial Intelligence Units, and provide them with access to broad information for the carrying out of their tasks;
  • Limit the anonymity related to virtual currencies and wallet providers, but also for pre-paid cards;
  • Broaden the criteria for the assessment of high-risk countries and improve the safeguards for financial transactions to and from such countries through enhanced due diligence;
  • Set up central bank account registries or retrieval systems in all member states;
  • Improve cooperation and enhance of information between anti-money laundering supervisors, prudential supervisors and the European Central Bank.

Legislation under constant review

The European Union has come a long way since it adopted the first anti-money laundering directive back in 1990 in an attempt to prevent the misuse of the banking system for financial crimes.

It obliged financial institutions to apply customer due diligence (CDD) requirements when entering into business relationships. The legislation has been constantly revised, and in 2015 the EU adopted a modernized regulatory framework. The 4th Anti-Money Laundering Directive and regulations governing the transfers of funds made it more transparent to assist law enforcement authorities to track down terrorists and criminals.

The new rules amend the 4th directive and were published in the Official Journal of the European Union on 19 June 2018, giving member states until January 10th of this year to bring them into force.

UK to adopt new AML rules despite Brexit

The United Kingdom will no longer be subject to the EU law once the Brexit transition is complete, but the UK is adopting the regulations in stages.

Most of the provisions came into force in the UK on January 10, 2020 with the exception of those governing customer due diligence on anonymous prepaid cards, which will be adopted in July 2020. The rules for requests for information about accounts and safe-deposit boxes will come into effect in September of 2020.

At CaseWare RCM, our flagship solution Alessa allows organizations operating in multiple jurisdictions to combat money laundering by screening individuals and entities as well as monitoring every financial activity across lines of businesses.  To learn more, contact us.

About Anu Sood

Anu Sood (LinkedIn | Twitter) is the Director Marketing at CaseWare RCM and is responsible for the company’s global marketing strategy. She has over 20 years of experience in product development, product management, product marketing, corporate communications, demand generation, content marketing and strategic marketing in high-tech industries.

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