In 1990 the European Union (“EU”) adopted its ever first Anti Money Laundering (“AML”) Directive in order to combat the abuse of the Financial Systems for the purpose of money laundering. Over the past decades there have been another 3 directives which were called to battle the Money Laundering in the territory of the EU and the directives defined new rules of compliance and due diligence in the financial sector within the EU. These set of norms consequently led to the development of guidelines outside of the EU as well, for instance on the level of OECD member states.
On 19th of April 2018 the European Parliament adopted the 5th Anti‑Money Laundering (“5AML”) Directive and by the 20th of January, 2020 all EU member states have to transpose the modified regulations of this Directive into their national laws. Hereby the summary of these key changes:
- The scope of the new Directive extends to the following obliged entities:
- Virtual currency providers (art. 1(2)d and the recital (10));
- Custodian wallet providers (art. 1(2)d);
- Art traders (when the value of transactions or series of linked transactions amount to EUR 10,000 or more);
- Those who provide similar services to auditors, external accountants and tax advisers as a principal business or professional activity;
- Estate agents who act as intermediaries in the letting of property where the monthly rent is equivalent to EUR 10,000 or more.
- Beneficial Ownership registers (was earlier discussed here) will now become accessible to the general public based on the Art.1(15)(c). This was (and still remains) as a highly contested notion, since many practitioners claim that the confidentiality of clients is prime for their personal security and well being of their families, that is why there is so far no unified approach in creating these registries across the Member States.
- Introduction of the Article 18(a) to harmonise the Enhanced Due Diligence measures across all Member States while dealing with the High Risk jurisdictions. This brings more certainty and less disagreements among Member States on how such business relations shall be handled.
- Based on the article 1(13), Each Member State will be required to maintain a list indicating the exact functions which, according on the national level would qualify as prominent public functions. Moreover, international organizations operating in such country should have such classification and lists as well. Consequently a single list of all prominent public functions will be assembled by the Commission and such list may be made public. Later on it will become apparent how the obliged entities will be an access to such list and how in practice this will help to identify politically exposed persons.
From the first glance these changes might seem marginal, however the introduction of these new aspects once again underline the importance of strong in-house compliance knowledge and the role of due diligence measures.
In the next article, other aspects will be introduced as well, to show a complete picture of the amendments.
Gayk Ayvazyan for ApricotLawyer. com