In a pivotal move to fortify the European Union’s defences against money laundering and terrorist financing, the EU Council and Parliament have recently struck a provisional agreement on an extensive anti-money laundering package. The press release of January 18, 2024, offers a detailed insight into the critical details of this accord, designed to protect both EU citizens and the integrity of the EU’s financial system.
The agreement significantly expands the list of obliged entities, encompassing financial institutions, banks, real estate agencies and others playing a central role in anti-money laundering and combating the financing of terrorism (AML/CTF). Notably, the inclusion of crypto-asset service providers (CASPs), traders of luxury goods and even professional football clubs and agents reflects a broader scope, addressing emerging challenges and vulnerabilities. Entities associated with individuals or entities subject to financial sanctions will be flagged, enhancing the scrutiny of potential risk factors. Moreover, public access to registers, including legitimate interest from the press and civil society, fosters transparency and public accountability.
The agreement introduces specific measures for cross-border correspondent relationships for crypto-asset service providers. Moreover, it mandates enhanced due diligence for business relationships with high-net-worth individuals involving the handling of substantial assets. This emphasis on due diligence aligns with global efforts to tighten scrutiny and prevent illicit financial activities. Harmonised and transparent rules on beneficial ownership have been established, setting the threshold at 25%. These rules extend to multi-layered ownership and control structures, ensuring transparency and discouraging attempts to conceal ownership through complex structures.
To curb money laundering, an EU-wide maximum limit of €10,000 for cash payments has been set, however member states retain the flexibility to impose lower limits if deemed necessary. Additionally, obliged entities are mandated to identify and verify individuals conducting occasional cash transactions between €3,000 and €10,000, thus adding an extra layer of scrutiny. In addition, obliged entities are required to apply enhanced due diligence measures to transactions involving high-risk third countries. The assessment of risk, based on Financial Action Task Force (FATF) listings, justifies additional specific EU or national countermeasures. This stringent approach aligns with global standards to mitigate the threat posed by jurisdictions with inadequate anti-money laundering and counter-terrorism financing regimes.
The agreement empowers Financial Intelligence Units (FIUs) with immediate and direct access to a broad range of information, facilitating their role in preventing, reporting and combating money laundering and terrorist financing. Each member state will ensure that all obliged entities established in its territory are subject to adequate and effective supervision by one or more supervisors. Notably, the Anti-Money Laundering Authority (AMLA) will develop draft regulatory technical standards defining the general conditions enabling the proper functioning of AML/CFT supervisory colleges.
The texts will now move towards finalization and presentation to member states’ representatives in the Committee of Permanent Representatives and the European Parliament for approval. If approved, the Council and the Parliament will formally adopt the texts before publication in the EU’s Official Journal and entry into force. As these texts move towards finalization and subsequent approval, the EU’s commitment to fortifying its anti-money laundering framework is evident.
cleversoft, as your regulatory technology partner, will take on board and implement any regulatory requirements in our solutions during this year’s roadmap as it stands ready to assist and ensure that your organisation seamlessly adapts to these stringent yet necessary measures. Our innovative solutions are tailored to meet the evolving demands of AML compliance, providing the support you need to navigate this new regulatory landscape effectively.
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