On 26 April 2018, the European Parliament confirmed the latest text of the proposed directive known as the Fifth Anti-Money Laundering Directive (5AMLD), which amends 4AMLD with the aim of tackling risks associated with virtual currencies.
5AMLD will bring in changes including:
Under 5AMLD, virtual currencies such as bitcoin will have a legal definition. Virtual currency platforms and wallet providers will also become regulated entities under the scope of the directive. While many already conduct due diligence and report suspicious transactions, the Fifth Directive will make it a legal requirement.
Prepaid cards
The Fourth Directive already cut the spending limits on prepaid cards. The Fifth Directive amendments will lower the requirement for customer verification from €250 to €150, and even to €50 for some remote transactions. The use of anonymous prepaid cards issued outside the EU may also be prohibited unless the jurisdiction is considered to have equivalent money laundering legislation to the EU.
Registers of Beneficial Ownership
The Fourth Directive introduced the requirement for Registers of Beneficial Ownership. The Fifth Directive proposes to go further by allowing public access to these records, even without having to demonstrate any kind of ‘legitimate interest’. Trusts will also be required to meet greater transparency obligations, including the beneficial ownership requirements. Where an entity poses a significant money laundering or tax evasion risk, the threshold for identifying beneficial ownership may be reduced from 25% to 10%.
Enhanced due diligence
The Fifth Directive will require enhanced due diligence when dealing with transactions from high risk countries. As well as obtaining evidence of the source of funds and source of wealth, information on beneficial ownership and background to the intended transaction must also be recorded. The EU may also designate a ‘blacklist’ of high risk countries for money laundering.
The Fifth Money-Laundering Directive also looks set to amend the ‘reliable and independent source’ requirement for verification of customer information to include ‘where available, electronic identification means’. This suggests that not only will the source have to be reliable and independent, it will also have to be electronic.
Increased reach
The Fifth Directive has been extended to cover all forms of tax advisory service, lettings agents and art dealers. Access will also be available to members of the public to request information on the real owners of firms operating in the EU, a measure aimed at quashing letterbox companies established solely to launder money and hide wealth. Whistleblowers who report money laundering will have also have increased protection and the right to anonymity.
(source: The VinciWorks Blog)
5AMLD will bring in changes including:
- Regulating virtual currencies and pre-paid cards to prevent terrorist financing
- Improving safeguards for financial transactions to and from high risk countries
- Ensuring centralised national bank and payment account registers or central data retrieval systems are accessible in all member states
Under 5AMLD, virtual currencies such as bitcoin will have a legal definition. Virtual currency platforms and wallet providers will also become regulated entities under the scope of the directive. While many already conduct due diligence and report suspicious transactions, the Fifth Directive will make it a legal requirement.
Prepaid cards
The Fourth Directive already cut the spending limits on prepaid cards. The Fifth Directive amendments will lower the requirement for customer verification from €250 to €150, and even to €50 for some remote transactions. The use of anonymous prepaid cards issued outside the EU may also be prohibited unless the jurisdiction is considered to have equivalent money laundering legislation to the EU.
Registers of Beneficial Ownership
The Fourth Directive introduced the requirement for Registers of Beneficial Ownership. The Fifth Directive proposes to go further by allowing public access to these records, even without having to demonstrate any kind of ‘legitimate interest’. Trusts will also be required to meet greater transparency obligations, including the beneficial ownership requirements. Where an entity poses a significant money laundering or tax evasion risk, the threshold for identifying beneficial ownership may be reduced from 25% to 10%.
Enhanced due diligence
The Fifth Directive will require enhanced due diligence when dealing with transactions from high risk countries. As well as obtaining evidence of the source of funds and source of wealth, information on beneficial ownership and background to the intended transaction must also be recorded. The EU may also designate a ‘blacklist’ of high risk countries for money laundering.
The Fifth Money-Laundering Directive also looks set to amend the ‘reliable and independent source’ requirement for verification of customer information to include ‘where available, electronic identification means’. This suggests that not only will the source have to be reliable and independent, it will also have to be electronic.
Increased reach
The Fifth Directive has been extended to cover all forms of tax advisory service, lettings agents and art dealers. Access will also be available to members of the public to request information on the real owners of firms operating in the EU, a measure aimed at quashing letterbox companies established solely to launder money and hide wealth. Whistleblowers who report money laundering will have also have increased protection and the right to anonymity.
(source: The VinciWorks Blog)
