New Rules Amending the Fourth AML Directive

The European Commission adopted a proposal to further strengthen European rules against money laundering and terrorist financing on July 5th 2016.

Pursuant to its action plan for strengthening the fight against terrorist financing which the Commission adopted on February 2nd 2016, and less than one year after the adoption of the fourth AML Directive (“the Fourth AMLD”), the European Commission proposes a set of reinforced rules that will amend the Fourth AMLD, which has to be implemented by European Union Member States into their national legislation by June 26th 2017. The European Commission, on the basis of its action plan decided, after the terrorist attacks, to expedite the process of implementation of the Fourth AMLD, which should now occur by the end of the year 2016.

Four measures aim at tackling terrorist financing:

  • Enhancing the powers of EU Financial Intelligence Units (the “FIUS’s”) and facilitating their cooperation. FIU’s will share widened information, especially those relating to bank account holders;
  • Including risks linked to virtual currencies. Virtual currency exchange platforms and custodian wallet providers will fall into the scope of activities subjected to AML-CTF prevention, when they exchange virtual for real currencies;
  • Addressing the risks regarding anonymous pre-paid instruments. Customer due diligence requirements will be enhanced and thresholds for identification will be lowered from EUR 250 to EUR 150;
  • Stronger checks on risky third countries. Banks will be subject to additional checks on financial flows from these countries. The list of countries, mirroring the FATF list, has been adopted on July 14th 2016.

Other measures are proposed to reinforce the provisions introduced by the Fourth AMLD:

  • Member States will make public certain information on the beneficial ownership registers on companies incorporated on their own territory (and, where applicable, for business-related trusts). For some kind of companies, the threshold of ownership will be set at 10%).
  • Those national registers will be directly interconnected (this interconnection should have been implemented by June 26th 2019 at the latest).
  • In response to the Panama Papers scandal, bank accounts (be they existing or newly opened) held by passive companies and trusts, will also be subject to greater scrutiny and tighter rules.

A draft law to implement the above changes is not as yet available. We will keep you posted about the coming developments.