By Hourad Afsar
The Fifth Money Laundering Directive (5AMLD) has come to force on January 10, 2020 which amends the 4th Anti-Money Laundering Directive 2018. The regulation was entered as law on July 9, 2018 reinforcing the European Union’s AML/CFT regime in an effort to bring increased transparency and clarity to financial transactions and cryptocurrency businesses on their anti-money laundering (AML) and counter-terrorism financing (CTF) obligations.
According to the the 5MLD fact sheet the changes will address a number of emergent and ongoing challenges. Here are key changes that will have far-reaching impacts:
Cryptocurrencies and Cryptocurrency exchanges are considered under new AML/CTF regulations as "obliged entities"with same obligations applied to Financial Institutions to perform Customer Due Diligence (CDD) and submit Suspicious Activity Reports (SAR). Financial Intelligence Units (FIU) will have the authority to obtain the addresses and identities of owners of virtual currencies and cryptocurrency exchanges and wallets must now be registered with their competent and local regulators. The consequences of noncompliance are heavy fines.
2. Beneficial Ownership
Higher transparency on Beneficial Owners with registers of legal entities information being now publicly available.
Transparency on the real owners of trusts.
Ultimate Beneficial Ownership (UBO) national registers must be inter-connected at an EU level to facilitate cooperation and exchange of information between Member States.
3 . E-Money Products (Prepaid Cards)
There are stricter conditions for the issuing of e-money with limits for prepaid cards lowered from 250 Euro to 150 Euro and online transactions limited to max 50 Euro. Prepaid cards issued outside the EU are prohibited unless the issuing country enforces legislation equivalent to the EU’s AML/CFT and KYC standards.
4 . Increased Due Diligence in High-Risk Countries
Nations from High-Risk Countries are required to undergo enhanced due diligence controls and measures addressing all deficiencies in respect to the money laundering risks they present. Businesses will be required to carry out their own due diligence checks on transactions with high-risk countries.
Need help complying with the EU’s Fifth Money Laundering Directive? Please get in touch with us at UGR Consulting for Next-Gen Compliance Subject Matter Expertise and Regulatory Technology Solutions.