Hot off the press, the EU Commission published its draft of the “AML Package” on 20 July 2021. The draft – if implemented – constitutes the biggest reform of European anti-money laundering legislation since the introduction of the first Anti-Money Laundering Directive.
With the package, the Commission is reacting to a long list of identified weaknesses in the previous approach (Panama Papers, Danske, Global Laundromat, Wirecard). Most recently, the EU Court of Auditors had clearly criticised the existing system.
2. What is the Commission proposing?
The “AML Package” contains four essential elements:
2.1. Introduction of an “AML Regulation”
Until now, the EU’s anti-money laundering legislation provided for directives to be issued, which the member states had to implement. In view of the current three infringement proceedings for inadequate implementation of the provisions of the fourth anti-money laundering directive (Directive (EU) 2015/849; the current directive is the “fifth money laundering directive” (Directive (EU) 2018/243)), the Commission has apparently had enough. With the introduction of the AML Regulation, the EU would create directly applicable law that would no longer require implementation by the member states.
The AML Regulation forms the core of the package. It regulates the essential due diligence obligations of the obligated parties, as they were previously regulated in Germany in §§ 4-17 GwG, as well as the most important definitions.
Some innovations concern the circle of obligated persons: The draft is good news for the so-called “goods traders”, who have so far eked out a rather shadowy existence in anti-money laundering legislation. Until now, goods traders were only obliged to apply general due diligence (“KYC measures”) when accepting cash payments of more than 10000 euros. The Commission’s proposal now provides for a ban on cash transactions of more than 10000 euros (and has already made it into wide media publicity). This would make the obligation of goods traders obsolete.
On the other hand, intermediaries of mortgage and consumer loans are to be included for the first time.
The proposal further includes some technical innovations in the identification and treatment of beneficial owners. Among other things, foreign companies are to be obliged to report to the respective transparency register if they enter into a business relationship with an obliged party or acquire real estate in the Union.
The AML Regulation sets out the requirements for customer identification and identity verification in much greater detail. Among other things, identification obligations are newly included in the event of doubts about information collected or the identification of customers on the order of the competent supervisory authorities. More detailed provisions are contained in the Regulatory Technical Standards, which are issued as regulation and are also directly applicable law.
2.2 Extension of the Money Transfer Regulation to crypto assets
The Money Transfers Regulation regulates the information to be provided or checked by credit or payment institutions when transferring funds. The Commission draft now proposes to extend these obligations to “crypto-asset service providers”. For the definition of crypto-asset service provider, the Commission refers to MiCAR.
According to the Commission’s idea, transfers of crypto assets should in principle be treated the same as cross-border payments. The consequence of this is that the obligors must collect and transmit the names of the sender and recipient of the transaction. Anonymous transactions with crypto assets are to be prevented according to the Commission’s will.
2.3. Adoption of a “6th Anti-Money Laundering Directive”
In addition to the AML Regulation, the Commission proposes a 6th Anti-Money Laundering Directive. The directive is to contain specifications, the design of which is to be left to the member states. This applies, for example, to the design of the transparency registers, the national risk analysis or the structure of the “Financial Intelligence Units” (FIUs).
2.4. Establishment of an EU Anti-Money Laundering Authority
The last building block of the package is the creation of an Anti-MoneyLaunderingAuthority (AMLA). The AMLA is to have two main tasks: On the one hand, it is to coordinate the work of the national supervisory authorities and develop uniform guidelines for the concretisation of European primary law. On the other hand, it is to directly supervise certain obligated parties from the financial sector. In addition, AMLA is to be given a kind of emergency intervention right if national supervision does not act, does not act in time or does not act sufficiently.
3. When should the changes apply?
The Commission proposal is now proceeding in the EU legislative procedure between Council and Parliament. Most of the provisions shall apply three years after the adoption of the legal acts. Individual provisions will enter into force earlier.