New proposals strengthen the EU’s anti-money laundering and countering financing of terrorism (AML/CFT) rules

As part of the EU’s commitment to protect its citizens and financial system from money laundering and terrorist financing, the European Commission recently presented an ambitious package of legislative proposals that have been designed to establish a robust and future-proof enforcement system.

It’s hoped that the new proposals will provide a number of benefits. Firstly, they’re designed to help improve the detection of suspicious activities and the tracing of criminals. Secondly, it’s hoped the proposals will close the loopholes criminals are currently using to either finance terrorist activities or launder illicit proceeds.

What proposals are included?

The latest package includes four legislative proposals that are set to be discussed by the European Parliament and the European Council. They are:

1.    The creation of a new EU AML Authority (AMLA)

The new authority will transform AML/CFT supervision in the EU and will enhance cooperation among financial intelligence units (FIUs). It will function as a central authority that will coordinate national authorities, as well as directly supervise selected highest risk cross-border entities. In doing so, it will ensure that the private sector correctly and consistently applies AML and CFT rules. 

2.    New regulation on AML/CFT

This new regulation will set a limit of €10,000 on large cash payments that will apply EU-wide, whereas previously this limit has been set to €15,000. The regulation also extends the scope of its subjects to include providers of crypto-assets and crowdfunding services. It will also contain a number of directly applicable rules relating to customer due diligence and beneficial ownership.

3.    A new directive on AML/CFT

The 6th directive on AML/CFT will replace Directive 2015/849/EU and will contain provisions that will be transposed into national law by Member States. These include provisions regarding powers and tasks of national supervisors and financial intelligence units in member states.

4.    Revision of the Regulation 2015/847/EU

Finally, the legislative package includes a proposal to amend the Regulation 2015/847/EU (also known as the Regulation on Transfer of Funds). The regulation will be revised to reduce the risks from the transfers that involve crypto-assets by making them traceable.

When will the legislation be enacted?

In order for the new rules to become operational, they must first be discussed by both the European Parliament and the European Council. As a result, although it’s hoped that the legislative process will be quick, the new AML authority, while is expected to be established in early 2023, is likely to start exercising its operational tasks (except direct supervision) in 2024. It will then start direct supervision of certain high-risk financial entities in 2026, when the directive has been transposed and the new rules begin to apply.

How Veriff can help your business

If you’re looking to show regulators that you take financial crime and compliance seriously, then our AI-powered AML and KYC compliance solution can help you. Through identity verification and the screening of global PEP and sanctions watchlists, it can help you fight financial crime. Arrange a consultation today to learn more.

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