With severe acts of terrorism taking place right at Europe’s doorstep, EU institutions seem to be stepping up their pace in order to ensure that stronger EU rules regulating money laundering and counter-terrorist financing are put into place at the earliest. With the recent approval by the European Council of draft new rules, it will not be long before this new law comes into force.

This 4th Anti-Money Laundering (AML) directive has the objective of strengthening current EU rules on anti-money laundering and counter-terrorist financing. It reflects the need for the EU to adapt its anti-money laundering legislation to take account of the development of technology and other means at the disposal of criminals.

The new draft directive has widened the list of persons obliged to abide by the anti-money laundering provisions. Traders dealing in goods where the cash payments made or received amount to €10,000 as well as providers of gambling services are now required to ensure full adherence to the new rules.

The current AML legislation obliges the persons to whom the law is addressed – banks, financial institutions, lawyers, auditors, notaries and real estate agents among others – to adopt policies and procedures which regulate the way in which the organisation complies with its anti-money laundering obligations. The new AML directive will require all persons subject to AML law to update policies and procedures and to be more vigilant about suspicious transactions made by their clients.

The draft directive will for the first time oblige EU member states to keep central registers of information on the beneficial owners of corporate and other legal entities, as well as trusts. A ‘[beneficial’ owner refers to that person who ultimately actually owns or controls a company and its activities and authorises transactions. These central registers will be accessible to the authorities and their financial intelligence units, to ‘obliged entities’ such as banks, and also to the public. Public access may, however, be made subject to online registration of the person requesting it and to a fee to cover administrative costs. In order to access such a register, a person will have to demonstrate a legitimate interest in suspected money laundering, terrorist financing and in offences that may help to finance them, such as corruption, tax crimes and fraud.

Central register information on trusts will be accessible only to the authorities and ‘obliged entities’.

The sanctions which a member state may impose on all those persons subject of this directive, who do not comply with the obligations stipulated therein, have intensified. The new draft directive contemplates hefty fines for the defaulter as well as a name-and-shame approach together with the withdrawal or suspension of any authorisation which the person concerned – be it a natural or legal person – requires in order to operate in the market in question.

The Council’s approval of the draft rules now paves the way for adoption of the law by the European Parliament in its plenary session. Member states will then have two years to transpose the directive into national law.

Considering that the amount of money laundered each year amounts to 2-5 per cent of global GDP and given the ever-increasing acts of terrorism, it is indispensable for Europe to have strong rules in place which can withstand the shady ways and means in which fraudsters and terrorists choose to operate in order to source funds for their illicit activities.

mariosa@vellacardona.com

Mariosa Vella Cardona is a freelance legal consultant specialising in European law, competition law, consumer law and intellectual property law.

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