EU strengthens its arsenal in fight against financial crime with 5th Anti-Money Laundering Directive

Firms will increasingly need to employ enhanced due diligence measures to comply with new rules targeting money laundering and terrorist financing, says LexisNexis® Risk Solutions

LexisNexis® Risk Solutions, the global information solution provider, has today reminded UK firms that a fifth revision of the EU’s Anti-Money Laundering Directive (AMLD) will be presented to the European Parliament on 16^th April and enacted into EU law two weeks later. It builds on the 4^th Directive implemented in May 2015 to prevent the use of the financial system for financial crimes such as money laundering and terrorist financing.

The proposed changes are part of the European Commission’s wider action plan for strengthening the fight against terrorist financing. In particular, LexisNexis® Risk Solutions has highlighted five key revisions to the current legislation that banks and other financial institutions must be aware of to remain compliant in their anti-money laundering provisions:

• Pre-paid cash cards: to reduce financial crimes linked to anonymous pre-paid instruments, vendors will be required to conduct more stringent customer verification and the threshold will be reduced from €250 to €150
• Digital currencies: thorough customer due diligence controls will be required by all virtual currency exchange platforms and digital wallet holders to address the growing money laundering risks associated with digital currencies
• High-risk countries: banks will be required to enhance their due diligence checks on financial transactions from high risk countries, including those on the harmonised list of non-EU countries with poor AML controls
• Access to beneficial owners’ registers: a higher level of transparency on the true beneficiary owners of companies will be achieved through the creation of national registers and information sharing between EU member states
• Increased powers for Financial Intelligence Units (FIUs): FIUs will have access to information in centralised banks and payment account registers to strengthen the identification of account holders

Whilst the directive applies to all financial institutions, its enforcement will spill over into adjacent industries and actors including auditors, notaries, estate agents and casinos, according to LexisNexis® Risk Solutions. The directive is expected to fully come into force by the end of 2019, so there will be a transitional period involved.

Michael Harris, Director, Financial Crime Compliance at LexisNexis® Risk Solutions comments:

“Removing these abhorrent crimes from the financial system will require far more thorough customer due diligence. Companies must be checking the identity of customers, particularly those from high-risk countries, and ensure they have ongoing monitoring in place to identify the true beneficial owners of assets, be those physical or digital.

The transitional period will prove interesting, as it comes at a time when the UK will be looking to implement its own anti money-laundering regulations once we have left the European Union. The global alignment of anti-money laundering regulations will be essential, otherwise compliance departments face a logistical nightmare.”

Firms will increasingly need to employ enhanced due diligence measures to comply with new rules targeting money laundering and terrorist financing, says LexisNexis® Risk Solutions

LexisNexis® Risk Solutions, the global information solution provider, has today reminded UK firms that a fifth revision of the EU’s Anti-Money Laundering Directive (AMLD) will be presented to the European Parliament on 16^th April and enacted into EU law two weeks later. It builds on the 4^th Directive implemented in May 2015 to prevent the use of the financial system for financial crimes such as money laundering and terrorist financing.

The proposed changes are part of the European Commission’s wider action plan for strengthening the fight against terrorist financing. In particular, LexisNexis® Risk Solutions has highlighted five key revisions to the current legislation that banks and other financial institutions must be aware of to remain compliant in their anti-money laundering provisions:

• Pre-paid cash cards: to reduce financial crimes linked to anonymous pre-paid instruments, vendors will be required to conduct more stringent customer verification and the threshold will be reduced from €250 to €150
• Digital currencies: thorough customer due diligence controls will be required by all virtual currency exchange platforms and digital wallet holders to address the growing money laundering risks associated with digital currencies
• High-risk countries: banks will be required to enhance their due diligence checks on financial transactions from high risk countries, including those on the harmonised list of non-EU countries with poor AML controls
• Access to beneficial owners’ registers: a higher level of transparency on the true beneficiary owners of companies will be achieved through the creation of national registers and information sharing between EU member states
• Increased powers for Financial Intelligence Units (FIUs): FIUs will have access to information in centralised banks and payment account registers to strengthen the identification of account holders

Whilst the directive applies to all financial institutions, its enforcement will spill over into adjacent industries and actors including auditors, notaries, estate agents and casinos, according to LexisNexis® Risk Solutions. The directive is expected to fully come into force by the end of 2019, so there will be a transitional period involved.

Michael Harris, Director, Financial Crime Compliance at LexisNexis® Risk Solutions comments:

“Removing these abhorrent crimes from the financial system will require far more thorough customer due diligence. Companies must be checking the identity of customers, particularly those from high-risk countries, and ensure they have ongoing monitoring in place to identify the true beneficial owners of assets, be those physical or digital.

The transitional period will prove interesting, as it comes at a time when the UK will be looking to implement its own anti money-laundering regulations once we have left the European Union. The global alignment of anti-money laundering regulations will be essential, otherwise compliance departments face a logistical nightmare.”