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Update: EU 5th Anti-Money Laundering Directive - 10 Jan 2020

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Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member


----quote

Hot on the heels of the Fourth Anti-Money Laundering Directive (4AMLD), the fifth version (5AMLD) is set to become law throughout the EU on 10 January 2020. With a focus on strengthening transparency rules, this mandate will further deter the concealment of funds and enable the EU to remain one step ahead in the fight against financial crime.

5AMLD demands new obligations from those in financial services. Data quality is of utmost importance. And tools for validating and verifying identities – including operations such as electronic identity verification, document verification, biometrics and liveness tests, and much more – play an important role in this effort. Is your regulated business ready for this new directive?

Cryptocurrency regulated
Cryptocurrencies are set to face the same regulations that have applied to financial institutions under 4AMLD, including combatting the financing of terrorism (CFT) and money laundering. This requires cryptocurrency exchanges to perform customer due diligence and submit ‘suspicious activity’ reports. Also, the anonymity associated with virtual currencies will be no more with EU Financial Intelligence Units (FIU) now required to obtain the addresses and identities of those who own this currency.

KYC for prepaid cards and remote payments
Initially, 5AMLD requires payment companies to carry out checks on customers using cards funded with more than €150, down from €250 under 4AMLD, along with payment service providers ensuring that those authorising a remote payment over €50 are identified. However, in three years, KYC (Know Your Customer) validation will be required for all remote payments, and prepaid cards issued outside the EU will face prohibition unless issued from a country that enforces legislation equivalent to the EU’s Anti-Money Laundering (AML), CFT and KYC standards.

Focus on ‘know your business’
5AMLD is very much about ‘know your business’ as the EU cracks down on companies used as a front for money laundering. While regulated businesses are obliged to perform checks on their customers for KYC purposes, they will need to implement checks on the businesses they trade with too.

This requires EU member states to set up a national register of beneficial ownership information on businesses, including trusts and holders of safe-deposit boxes, to share with other members. Records must include information on those with a 25 per cent stake or more in the company, in case an individual may be using a business they partly or wholly own for illegal activities. This information will also be available to the public.

In the age of 5AMLD it’s up to regulated businesses to obtain the proof of company registration or an excerpt from the register to identify and verify the organisations’ ultimate beneficial owners before starting a new business relationship.

Risky countries
Those states that are identified by the EU as risky, because they don’t have stringent regulations on AML and KYC, require increased checks on the financial flows from them into the EU. Regulated organisations must have access to the EU’s list of these countries and update their due diligence processes to ensure compliance.

Consequences of non-compliance

A huge issue for those that fail to comply with 5AMLD will be the brand damage caused by the negative publicity surrounding the sanctions they face. This can include fines of up to €5 million or ten per cent of annual turnover. Furthermore, there are consequences for management; these individuals could be banned from running a regulated business, with the organisation possibly prevented from trading as a result of compliance violations.

Smart data quality = compliance

The expense of compliance to the new law is a real worry for many of those in financial services, with nearly two thirds of firms surveyed by Thomson Reuters in 2018 expecting their total compliance budget to be slightly or significantly more over the next 12 months. However, having easy access to a single global source of up-to-date data for ID verification, one that also helps to maintain data quality, is the best way to lessen the burden and help ensure compliance.

This approach enables seamless access to billions of up-to-date records worldwide for verification of passports, driver licences and ID cards, and confirmation of vital proof of address, along with checks against current watch lists, such as politically exposed persons. Of equal importance, the customer onboarding process and strong customer experience are protected as the checks leveraging this data take place in real-time, even during sophisticated operations such as biometric validation and liveness tests.

5AMLD requires those in financial services to adequately know their customers, whether they are a consumer or a business, which has a huge impact on how they conduct due diligence and onboard new customers. Is your regulated business ready?

----end quote

 

KJK

Entrepreneur
does this mean we should be a slave and cant do our business =_= even legal business you cant do bcuz of a lot of restrictions
I think that is the end goal, have a defenseless herd of citizens without an opinion - when you have that, you can tax them 70%, you can manipulate elections with populist politicians promising whatever people want to hear right now (tax the wealthy, tax the banks, subsidize EU projects, UBI...) and scaring people with whoever they may feel threatened by (Polish plumbers, jews, muslims, anarchists, terrorists), refugees).

In the past if you were doing something unnice (such as growing weed and selling it lol...) you had to have some cover story and you had to launder "dirty" money. Now even if you have a legal business as you say, you actually have to launder clean money! Because otherwise banks will go crazy and close your account.

Thanks god we have the nice state which will protect us from the bad guys. /s

all remote payments, and prepaid cards issued outside the EU will face prohibition
So basically be prepared to have no privacy and have all your transactions stored somewhere. Then a simple request will show everything about you - where you were, what you like to eat, which places you visit and when.

I see only two possible ways out of this - cash or crypto ("digital cash"). People may prefer cash but it is difficult when cash transactions are limited (in Spain you cannot even withdraw more than 300€ from an ATM) and bank transfers as well (anything above €15k and you will get asked many questions).

In some countries people are used to it so much they wouldn't mind abandoning or banning cash - e.g. in Sweden many shops do not accept cash at all, only cards.

Then you get total control by the state in two ways:
1) total oversight over all transactions and money movement and
2) total oversight over the money supply which means people keep money in banks and you can issue negative interest rates because people won't be able to protect themselves. So an even easier way for the government to slowly and stealthily steal from the population.

This approach enables seamless access to billions of up-to-date records worldwide for verification of passports, driver licences and ID cards
Wow, I see no way where that could go wrong, right...

GB has even tighter restrictions.
Like there is a good place for living and doing business
There is no "one good place" though it is definitely NOT GOOD to rely on one place / one country / one region. You should be prepared that things can get even worse and have an escape plan. I regret that UK decided to leave EU but on the other hand I understand them.

I don't know any good solution, maybe just leave the EU, use crypto instead of cards, spread the awareness...
 

lavel

Offshore Agent
Mentor Group Gold
Cryptocurrency regulated
Cryptocurrencies are set to face the same regulations that have applied to financial institutions under 4AMLD, including combatting the financing of terrorism (CFT) and money laundering. This requires cryptocurrency exchanges to perform customer due diligence and submit ‘suspicious activity’ reports. Also, the anonymity associated with virtual currencies will be no more with EU Financial Intelligence Units (FIU) now required to obtain the addresses and identities of those who own this currency.
Do you believe that there will be accounts around in 1 o2 years which are still anonymous and can be used as today without verification? If so, what countries would you expect ignoring these rules?
 

Artemis Eleutheria

Entrepreneur
Cryptocurrency regulated
Cryptocurrencies are set to face the same regulations that have applied to financial institutions under 4AMLD, including combatting the financing of terrorism (CFT) and money laundering. This requires cryptocurrency exchanges to perform customer due diligence and submit ‘suspicious activity’ reports. Also, the anonymity associated with virtual currencies will be no more with EU Financial Intelligence Units (FIU) now required to obtain the addresses and identities of those who own this currency.

King Canute is ordering the tide to turn ... laughable.
 

void

Entrepreneur
I see only two possible ways out of this - cash or crypto ("digital cash"). People may prefer cash but it is difficult when cash transactions are limited (in Spain you cannot even withdraw more than 300€ from an ATM) and bank transfers as well (anything above €15k and you will get asked many questions).

I totally agree with KJK's post - I'd just point out this part - crypto is obviously the only way how to cope with this trend
we are far behind the tipping point where anything could have been done by the means of politics and social consensus
anybody who values freedom and feeling threatened should support and use crypto as a new cash
 

Tax Cow

Moo Moo! I contribute 60% of my milk to the state.
Entrepreneur
I've got a slogan!
5AMLD - "Doubling down on a solution that has proven to be inefficient".

The change affecting crypto exchanges is significant. In the future, most exchanges will be incorporated outside the EU to keep those pesky compliance costs down. This will negatively affect EU states that have branded as "crypto friendly", in particular Malta.

The change affecting prepaid cards issued outside the EU is significant. I'm ready for some restaurant escape comedy. Imagine a Cambodian couple in an Italian restaurant. The foreign prepaid card is not accepted. The man goes to a nearby ATM to withdraw cash for the bill. He cannot withdraw cash either. The man goes back to restaurant: "Baby, you must take off your high heels! Do you understand what we're about to do?"

Anyway, wish them luck building the 21st century communist state :cool:
 

GrumpyMess

Entrepreneur
I see only two possible ways out of this - cash or crypto ("digital cash"). People may prefer cash but it is difficult when cash transactions are limited (in Spain you cannot even withdraw more than 300€ from an ATM) and bank transfers as well (anything above €15k and you will get asked many questions).
Crypto is inefficient nowadays, you lose quite a lot on it because of rate fluctuations or exchange rates, but cash is inconvenient, especially when traveling.

So basically be prepared to have no privacy and have all your transactions stored somewhere
Not only transactions, nowadays almost all online banks, payment systems and crypto exchanges store your biometry data. The scariest thing is that in some years there will be 6th, 7th directive with even tighter terms.

5AMLD - "Doubling down on a solution that has proven to be inefficient".
It's quite an efficient solution for those who govern the people. They don’t care about the business since they get paid from the budget
 

Bmw850

BANNED MEMBER
It is well written, even long enough to make me sleep. It's also may afraid the ones who follow the rules usually.
If you don't like restrictions, and rules, you may have found several solutions already which avoid those new rules to impact your business. I haven't seen one at least.
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member

L0rdCROISSANT

New member
since when did this tiny continent become such a powerhouse? the euro is so unstable too, rules get bent to keep it together and yet they are acting like the playground bully. don't get it
 

Natasja

New member
I will refrain myself from writing an essay with various counter-arguments for such an implementation, but it's pretty alarming to see that any legislation that infringes on the privacy of it's citizens can be justified by stating that it's been done to "fight money laundering and terrorism financing".

I will say no more, curious how this turns out.
 

TRX

Corporate Services
Mentor Group Gold
Elite Member
This is the new Era of total government control and Uncle Sam... This world will be a total shit hole in the next century we will be slaves for the rich people.

uncle-sam.png
 
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