June 19, 2018 – NEW 5th AML Directive Publication
The latest revision of the Anti-Money Laundering Directive (“5th AML Directive” or “5AMLD”) was agreed by the European Parliament in April 2018, and subsequently published by the Official Journal of the European Union on June 19, 2018 (Directive EU 2018/843). The Directive then entered into force on July 9, 2018 with the deadline for EU Member States to transpose these enhanced measures into their national AML Laws by January 10, 2020.
This latest revision adds weight to the Commission’s on-going battle to strengthen protocols in the fight against money laundering and terrorist financing. The changes and enhancements are largely a result of some defining moments having occurred over the past few years exposing the need for further development of the 4AMLD (EU Directive 2015/849 of the EU Parliament).
The Panama Paper scandal revealed a lack of transparency amongst EU Member States in relation to the ultimate beneficial owners of corporate entities, trusts, bank accounts and the terror attacks in France in 2017 meant that the European Commission and Parliament recognised the 4AMLD did not sufficiently address the latest trends and the new sophisticated methods being utilised for money laundering and terrorist financing.
Transparency is now covered in the new directive and the use of virtual currencies and pre-paid cards are now also now specifically addressed in that payment amounts on prepaid cards are now restricted for purchases being made both online and in person. The updates attempt to align AML and CTF requirements and ensure they have the same standards.
The key enhancements are as follows;
The amended Directive now focuses on Virtual Currency risks and regulations. This is approach already being taken in the US, where Virtual Currency Exchange’s are subject to the Bank Secrecy Act and are required to register as Money Service Business (“MSB”) with FinCEN.
Other professionals now in scope, and therefore subject to apply KYC and enhanced Due Diligence measures on their clients are:
The revised Directive provides extended responsibility and reporting obligations, facilitating the collaboration between national FIUs and bank supervisors regarding the exchange of information.
This latest move certainly represents an important step forward in the harmonisation and coalition of EU Member states combatting the latest changing landscape and ever-growing list of methods utilised by criminals for money laundering and the financing of terrorism. However, as technology continues to evolve, notable gaps quickly appear and it is therefore no surprise that even after this announcement the e EU Commission are already beginning work on a 6th AML Directive.
The 6th Directive will address the nuances and discrepancies between different EU Member States in the transposition of the directive into national laws. There will be a common definition to ensure consistency of adoption across all Member States in the future.
The differences in sanction measures applied to criminals for predicated offences will also be addressed. A strengthening in overall awareness and a monitoring program for obliged entities detecting criminal offences will be put in place.
 VCEP are providers engaged in exchange services between virtual currencies and fiat currencies” (i.e. cryptocurrency exchanges). Virtual currencies are defined as digital representation of value that is not issued or guaranteed by a Central Bank or Public Authority.
 CWP are defined by the Directive as an entity that provides accounts that are denominated in virtual currencies and via which payments in virtual currencies can be rendered and received. They store private cryptographic keys on behalf of its customers.
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