On June 19th, 2018, the AMLD5 (fifth EU Anti-Money Laundering Directive) was published in the official journal of the European Union. The AMLD5 modifies the fourth Anti-Money Laundering Directive (AMLD4). The AMLD5 entered into force on July 9th, 2018. Member states are obliged to transpose the modified regulations into national law by latest January 20th, 2020.
Innovations, that the AMLD5 will bring:
- Extends the scope to wallet providers and virtual currency platforms, traders of art and tax related services. The AMLD5 will apply to virtual currency exchange service providers and electronic wallet providers to cover the risks associated with virtual currencies. The AMLD5 will also affect persons who provide tax related services but are not obliged auditors, accountants or tax advisors. Traders of art will be obliged parties in the meaning of the AMLD5 to the extent they trade at values above 10 000 euros.
- Provides access to the society to beneficial ownership information of EU based companies. The necessity to show a legitimate interest for access will be eliminated. However this does not apply to trusts and similar legal arrangements. In that case access to beneficial ownership information will be given to any person that can show a legitimate interest and also to any person filing a request in relation to a trust or similar legal arrangement which holds or controls any corporate or other legal entity. Access will include, as a minimum: the beneficial owner’s month and year of birth, country of residence, nationality, and the nature and extent of the beneficial interest held. Obliged persons will have to notify the authorities of any disparity found while conducting customer due diligence between the beneficial ownership information on the registers and the beneficial ownership information they have. Beneficial owners will have to provide the entities with true beneficial ownership information.
- Obligates to consult the beneficial ownership register when performing AML due diligence. Now obliged parties have to consult the corresponding beneficial ownership register when performing a KYC prior to any new business relationship.
- Obliges member states to create a list of national public offices and functions. That offices and functions will be qualified as politically exposed (PEP). The EU will draft a list on EU level, consolidate the national lists from member states and publish the result. The lists will not show any names of persons.
- Introduces strict enhanced due diligence measures for financial flows from third countries with high risk. Enhanced Due Diligence measures in relation to customers from third countries as presenting an increased risk of money laundering, will be amplified. Obliged parties will have to perform a set of new strict enhanced due diligence measures. For example, now Member States have the right to require the use of bank accounts in countries with EU or equivalent AML standards for the first business relationship transaction. Member States may introduce further enhanced controls, such as reporting obligations for financial transactions with high-risk third country partners, or limiting the establishment of such companies from high-risk third-country entities or creating companies by their own nationals in such high-risk third countries.
- Completes the anonymity of bank and savings accounts, as well as safes and creates mechanisms for centralized access to information on bank accounts and safes throughout the EU. Anonymous bank accounts, savings accounts or safes will be canceled. Member States must create central registries or central electronic data retrieval systems no later than 10 September 2020 that will allow the timely identification of any natural or legal person who owns or controls bank or savings accounts and safes. This information will be directly accessible to financial intelligence units (“FIUs”) and national competent authorities.
- Makes information about property owners centrally accessible to public authorities. Information on the ownership of real estate by any natural or legal person will be centrally accessible to state authorities; This does not require the creation of a central register of real estate.
- Reduces thresholds to identify prepaid card customers and use electronic money. The threshold for identifying prepaid card holders will be further reduced from 250 to 150 euros. Electronic money Online transactions with prepaid cards will be limited to max. 50 euros (may be further reduced by Member States). In accordance with MLD4, Member States may allow obligated organizations to apply simplified due diligence measures for electronic money that meet certain conditions, including threshold amounts. MLD5 reduces these amounts and imposes restrictions on anonymous prepaid cards issued in third countries.
• Further expansion of the powers of the FIU and the promotion of cooperation and the exchange of information between authorities. The rights and powers of the national financial intelligence units of the EU will be expanded, and cooperation and information exchange between the FIU and other relevant institutions will be expanded. For example, the FIU will be allowed access to the information on the centralized bank account mentioned above.