Negotiators from the European Parliament and the European Council reached an informal agreement on the EU 4th Anti-Money Laundering Directive. Judith Sargentini, the Civil Liberties Committee rapporteur, stated that the 4th Anti-Money Laundering Directive “will provide much greater transparency of the shadowy business structures that are at the heart of money laundering schemes, as well as schemes used by businesses to avoid their tax responsibility”.
The 4th Anti-Money Laundering Directive requires a risk-based approach to identify and mitigate risks, and firms will need to implement evidence-based measures. Some of the key changes that will be introduced are as follows:
- European Union member states will be required to maintain central registers detailing information on the ultimate beneficial owners of corporate entities and other legal entities, including trusts
- Banks, auditors, lawyers, real estate agents and casinos will be required to increase the level of monitoring of their business relationships
- Rules on simplified due diligence will be tightened and situations where exemptions apply will no longer be permitted. Decisions on when and how to carry out simplified due diligence will need to be justified on the basis of risk
- PEP status will be extended to domestic PEPs and to PEPs working in international organizations. PEPs will remain politically exposed for a minimum of 18 months after leaving their positions
- Customer due diligence thresholds will be reduced for traders for cash transactions from EUR 15,000 to EUR 7,500
- Central registers will be accessible without any restrictions to the competent authorities, banks conducting due diligence and the public (with the exception of the information held by the trust, which will be accessible to the competent authorities only)
- Additional provisions will be introduced to protect personal data; and
- Penalties will be imposed in cases of systematic breaches of key requirements, namely customer due diligence, recordkeeping, suspicious transaction reporting and internal controls
The 4th Anti-Money Laundering Directive must be endorsed by EU member states’ ambassadors (COREPER) and by the European Parliament’s Economic and Monetary Affairs and Civil Liberties, Justice and Home Affairs committees before going through a vote by the European Parliament in 2015.