In a significant stride towards strengthening the EU’s defences against money laundering and terrorist financing, the Council and Parliament have successfully brokered a provisional agreement on key aspects of the anti-money laundering package. This breakthrough represents a crucial step forward in safeguarding EU citizens and fortifying the integrity of the EU’s financial system.
Enhancements to National Systems
This groundbreaking agreement is an integral component of the EU’s new anti-money laundering system, designed to enhance the organisation and collaboration of national systems combatting money laundering and terrorist financing. The concerted effort aims to leave no room for fraudsters, organised crime, and terrorists to legitimise their proceeds through the financial system.
Comprehensive Harmonisation Across the EU
For the first time, the provisional agreement on an anti-money laundering regulation will comprehensively harmonise rules throughout the EU. This strategic move closes potential loopholes exploited by criminals to launder illicit proceeds or fund terrorist activities through the financial system. Simultaneously, the directive will address the organisational aspects of anti-money laundering and countering the financing of terrorism (AML/CFT) systems at the national level.
Expanding the Scope of Obliged Entities
The provisional agreement expands the list of obliged entities, including financial institutions, banks, real estate agencies, asset management services, casinos, and merchants, who play a pivotal role as gatekeepers in the AML/CFT framework. Notably, the crypto sector will see increased scrutiny, with all crypto-asset service providers (CASPs) required to conduct due diligence on transactions amounting to €1000 or more.
Addressing Risks in Various Sectors
Luxury goods traders, including those dealing with precious metals, stones, jewellery, as well as luxury cars, airplanes, yachts, and cultural goods, will also fall under the ambit of obliged entities. The agreement recognises the football sector as high risk, extending obligations to professional football clubs and agents.
Tightening Controls on Cash Payments
In a move to make it more challenging for criminals to launder money, the agreement imposes an EU-wide maximum limit of €10,000 for cash payments. Member states have the flexibility to set lower limits if deemed necessary. Additionally, obliged entities must identify and verify the identity of individuals conducting occasional transactions in cash between €3,000 and €10,000.
Transparent Beneficial Ownership Rules
The provisional agreement brings greater harmonisation and transparency to the rules on beneficial ownership. Beneficial ownership, based on ownership and control components, is clarified, with a threshold set at 25%. The agreement also mandates the registration of beneficial ownership of all foreign entities owning real estate retroactively from January 1, 2014.
Mitigating Risks in High-Risk Third Countries
Obliged entities will be required to apply enhanced due diligence measures to transactions involving high-risk third countries. The Commission will assess the risk based on international standards, potentially triggering additional EU or national countermeasures.
Empowering Financial Intelligence Units (FIUs)
FIUs will gain immediate and direct access to a range of information, facilitating efficient analysis and dissemination. The agreement ensures the application of fundamental rights in the FIU’s work and outlines a framework for suspending or withholding consent to a transaction.
Supervisory Measures and Risk Assessments
Supervisors will play a crucial role in overseeing obliged entities, applying a risk-based approach. Both EU and national risk assessments will remain vital tools, with the Commission conducting an EU-level assessment and member states committing to mitigating identified risks at the national level.
Next Steps
The agreement will undergo finalisation and presentation to member states’ representatives in the Committee of Permanent Representatives and the European Parliament for approval. Upon approval, the Council and Parliament will formally adopt the texts before their publication in the EU’s Official Journal, marking their entry into force.
Background
The legislative proposals, presented by the Commission in July 2021, include regulations establishing a new EU anti-money laundering authority (AMLA), recasting the regulation on transfers of funds, and introducing anti-money laundering requirements for the private sector, alongside a directive on anti-money laundering mechanisms.
Source: Council of the EU Press Release (January 18, 2024)
Editor: Andreea Gudin
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