A New Legislative Package to Fight Financial Crime: EC to Strengthen AML/CFT Rules

© European Union, 2016

The Commission finally presented a new AML package of legislative proposals to enhance the existing EU framework, strengthen the EU’s AML/CFT rules and fight financial crime. The proposals are expected to solve the problems with the current regime: fragmented approach across the EU, lack of convergence, inefficient cooperation between national supervisors and FIUs. The basis of this package is the Action Plan for a comprehensive Union policy on preventing ML/TF, presented on 7th May 2020, which required legislative action regarding its pillars 2, 3 and 4 regarding: EU single rulebook on AML/CFT; EU-level AML/CFT supervision; support and cooperation mechanism for FIUs.

The four legislative proposals are the following:

  1. Regulation establishing a new EU AML/CFT Authority (AMLA), which should be operational in 2024;
  2. New regulation on AML/CFT, containing directly applicable rules, including in the areas of CDD and BO;
  3. 6th Directive on AML/CFT (AMLD6), which will replace existing Directive 2015/849/EU;
  4. Revision of Regulation 2015/847/EU on Transfers of Funds, to trace transfers of crypto-assets.

AMLA will be the central authority coordinating national supervisions and enhancing coordination among FIUs. It will also supervise directly the financial sector obliged entities that are active in a significant proportion of MS and have the highest risk profile in several of those MS as well as, irrespective of criteria, financial sector obliged entities that are systematically failing to meet their AML/CFT requirements, where there is a significant ML/TF risk.

EU AML/CFT rules will apply fully to the crypto sector. Indeed, there will be a number of addictions to the list of obliged entities, including all crypto-asset service providers. Other issues tackled by the package include: digital identification; transactions in cash (an EU-wide limit of € 10.000 € on large cash payments has been proposed); third-countries policy and ML/TF threats from outside the Union (those third countries listed by FATF will also be listed by the EU, and there will be a “black list” and a “grey list”, reflecting the FATF listing).

The Commission considers that the new proposals will ease AML/CFT compliance for companies and that all obliged entities should benefit from improved supervision and from better feedback from FIUs, which will enable more targeted reporting of suspicious transactions and activities. The legislative package will be discussed with the EP and the Council and the Commission hopes for a speedy legislative process.

More information here.