The Fourth Anti-Money Laundering Directive (4th AMLD) came into force on 26th June 2015 and this 4th Anti-Money Laundering Directive is in line with the 2012 recommendations made by the Financial Action Task Force. EU Member States now have two years to transpose the Anti-Money Laundering Directive into national law.
The Fourth Anti-Money Laundering Directive applies to ‘obliged entities’, being credit institutions, financial institutions and legal or natural persons acting in the exercise of their professional activities, including auditors, external accountants and tax advisors, notaries and other independent legal professionals, other trust or company service providers, estate agents and other persons trading in goods to the extent that payments are made or received in cash in an amount of EUR 10 000 or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked, and for the first time, providers of gambling services, which with the exception of casinos, may be exempted by member states based on risk assessment.
The 4th Anti-Money Laundering Directive introduces new rules including:
- The Politically Exposed Person (PEP) regime is to extend to domestic PEPs and any person having a prominent function in an international organisation.
- The elimination of the automatic entitlement to apply Simplified Customer Due Diligence system to certain customers and products.
- More sanctions to be imposed when obliged entities breach their Anti-Money Laundering and Counter Terrorist Financing Responsibilities.
- Identification of the beneficial owner of companies and trusts is to be simplified through the creation of registers of ownership information.
- The creation of a list of PEPs and their relatives and close associates to aid obliged entities in identifying these individuals.
- The introduction of EU and national level risk assessment. Obliged entities would assist in this process by conducting their own risk assessment of their business and customers.
It is expected that obliged entities will now need to be more informed about their customer base and their commercial partners’ businesses and their beneficial owners. Furthermore, anti money laundering advice will be essential for each EU member state in which an obliged entity has its customers. Risk assessed approach and findings also need to be documented.
With respect to gambling, the 4th Anti-Money Laundering Directive will bring about challenges, mostly related to cross-border issues. PEP checking is one major issue where a gambling operator has players situated in multiple jurisdictions – the players have to be checked for local or foreign or international political exposure. In addition, confusion might also arise over which laws of which jurisdictions apply and which Financial Intelligence Units to report to.
The regulation of money laundering is an important aspect of EU regulation. Whilst the 4th Anti-Money Laundering Directive brings about challenges, it also builds on the previous directives and further endeavours to control financial crime within the EU.
