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EU anti money-laundering and terrorist financing

Paul Foley
The new EU AML/CTF Regime (i) aims to create a comprehensive legal framework for the prevention, detection, and investigation of money laundering and terrorist financing and (ii) aligns the new AML/CTF EU Regime with the recognised international standards of the Financial Action Task Force Anti Money Laundering and Counter Terrorist Financing Standards (FATF Standards). In fact, the new regime surpasses the FATF Standards in several areas. This article summarises the regime.

January 10 2020 is the final date by which Member States have to implement the Fifth Money Laundering Directive (Directive 2018/843) (MLD5). MLD5 being the final piece of the new EU Anti Money Laundering and Counter Terrorist Financing (EU/AML) regime.

MLD5 was proposed by the Commission in July 2016, in the wake of terrorist attacks and the revelations of the Panama Papers scandal, and its adoption is part of the Commission's Action Plan of February 2016 to strengthen the fight against terrorist financing.

EU Commission Powers

The new EU AML/CTF regime empowers the EU Commission to (i) adopt delegated Regulations (which apply directly in Member States) identifying high risk third countries (ii)  produce regulatory technical standards where uniform standards are required and (iii) for the ESA (as defined below) to produce guidelines which can be addressed to obliged entities (as defined below) and NCAs, which have to comply with or explain why they cannot comply.

Article Index

Articles 1 and 5 — Money Laundering and Terrorist Financing

Articles 2 and 4 — Obliged Entities

Articles 6 to 8 — Risk Assessments

Articles 9 and 18a — High Risk Third Countries: Prescriptive Enhanced Due Diligence

Article 10 — Anonymous Accounts, Anonymous Passbooks, Anonymous Safe Deposit Boxes

Articles 10-14 — Customer Due Diligence

Article 15 to 17 — Customer Due Diligence Applying Simplified Due Diligence (SDD)

Article 18, 18a-to 24 — Enhanced Customer Due Diligence (EDD)

Article 24 — Shell Banks

Articles 25 to 27 — Third Parties

Article 28 — Groups

Article 30 — Beneficial Ownership Information Corporates and Other Legal Entities

Article 31 — Trusts and other types of Legal Arrangements

Article 31 — Central Beneficial Ownership Register for Trusts

Article 31a — Implementing Acts Technical Specifications and Procedures

Article 32 — Financial Intelligence Units (FIUs) FIU Establishment and Functions

Article 32a — Centralised Automated Mechanisms for Identifying Persons Holding or Controlling Bank Accounts and Payment Accounts

Article 33 — Co-operation by Obliged Entities and their Staff with FIUs

Article 36 — Reporting obligation on NCAs and supervisory bodies

Article 38 — Protection for Individuals who Report Suspicions

Article 39 — Prohibition on Disclosure of Information

Article 40 — Record Retention

Article 45 — Group Wide Policies and Central Contact Point for eMoney Issuers and Payment Services Providers

Article 47 — Registration of Providers of Exchange Services between Virtual Currencies and Fiat Currencies

Articles 58 to 61 — Harmonising Member States Administrative Sanctions and Measures for Breach

Article 59 — Special provision for Credit Institutions and Financial Institutions

Article 60 — Publication of Decisions to impose Administrative Sanctions or Measures

WTR Wire Transfer Regulation

Articles 5 & 6 — Transfer of funds within and to outside the Union

Article 4 — Obligations of the Payer PSP

Articles 7 and 8 — Obligations of the Payee PSP

Articles 10 to 13 — Obligations on the Intermediary PSP

Article 13 — Assessment and Reporting

Article 2 — Where the WTR does not apply

Article 16 — Record Retention

Articles 41 and 43 MLD4 and MLD5 — Data Protection

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