EU’s latest Anti-Money Laundering (AML)

Roughly 6 months after the enactment of the 5th EU Anti-Money Laundering Directive, on November 12, 2018, the European Parliament issued additional rules to strengthen the battle against money laundering.

Member states of the EU are required to transpose the 6AMLD into their national laws by December 3, 2020. After this, relevant regulations must be executed by organizations within the member states by June 3, 2021. 

Key Elements of 6AMLD

Some of the key elements of 6AMLD include enhanced cooperation between the member states of the European Union, tougher punishments for offenders and much more.

Enhanced Collaboration Between EU Member States

6AMLD outlines aspirations for greater cooperation between the member states of the EU. The collaboration related to financial crime, especially concerned with cross-border issues seeks to avoid having a single cross-continent Financial Intelligence Unit (FIU).

United Predicate Offenses

To increase the collaboration between EU member states, 22 predicate offenses have been defined. The most distinguished amongst these is the standard terminology related to environmental crime, tax evasion, cybercrime, self-laundering and other terminology relevant to AML Compliance.

Sufficient Resources

Firms and organizations will have to develop not only a good understanding of the predicate offense but also know about the kinds of risks and related factors involved. Moreover, there is an expectation that there should be satisfactory resources and personnel available. Proper training should be provided to the related staff for the identification of the risks involved. Firms will also have to confirm they have the most recent technologies for AML screening.

Addition of Criminal Liability

According to 6AMLD, a new policy will be implemented related to offenses committed either by a legal person (corporate entity) or a natural person (any individual). This policy signals a crucial change as it confers responsibility both to the management a well as company employees separately.

Addition of Offenses

6AMLD puts a lot of focus on offenses in case of the absence of a proper AML screening. The addition of “aiding and abetting, inciting and attempting an offense” of money laundering constitutes a crime and is “punishable as a criminal offense”.

Tougher Punishments for Money Laundering Offenses

The minimum custodial sentence for money laundering offenses is getting increased from one to four years in 6AMLD. The maximum fine is being raised to €5m (or non-Euro equivalent).

Strict Measures for Cryptocurrency

6AMLD focuses a lot on virtual currencies including cryptocurrency. Crypto exchanges have to follow AML Regulations or else they will face penalties.

AML Compliance following 6AMLD can become a bit tricky for businesses. It can become challenging for organizations to comply with these changing regulations. The advancements in the global communications network and the globalization of the financial systems means that the amount of information available on individuals and businesses is increasing at an exponential rate. It is becoming essential for organizations to have proper KYC and AML screening in place. The development in RegTech allows organizations to access and monitor all new data as and when it arrives. This allows organizations to have proper AML screening and be AML compliant.