May 16, 2019
In response to recent terrorist attacks in Europe, amendments are being made to the 4AMLD to assist in the fight against terrorist financing and increase transparency in financial transactions. 5AMLD seeks to update the 4AMLD to align with modern trends and technologies and strengthen current rules regarding transparency and cooperation between financial supervisory authorities. It also provides for updated rules regarding PEPs and strengthens requirements for entities dealing with high risk third countries. 5AMLD came into force 9 July 2018 and must be transposed into Member States’ national law by 10 January 2020.
Establishing a rule of public access: The 5AMDL requires that Member States allow access to beneficial ownership details on corporate and other entities in a coordinated manner. 5AMLD seeks to balance the need for a public register with confidentiality and data protection rules. The information available on the public register will therefore be specific and limited.
Access to data on beneficial owners of trusts will be accessible without any restrictions to competent authorities, professional sectors subject to AML rules (e.g. lawyers and banks) and will be accessible to other persons who can demonstrate legitimate interest.
Better Connection of the beneficial Ownership registers
5AMLD requires the establishment of better verification mechanisms to ensure information on the registers is accurate. The national registers will be interconnected directly to facilitate cooperation and exchange of information between member states.
Member States are now required to issue lists with the specific functions that qualify as prominent public functions, in order to ensure that persons who perform such activities will be identified and, if necessary, monitored.
Member States are also required to request such a list from international organisations accredited in their territories.
High-Risk Third Countries
5AMLD seeks to harmonise how Member States ensure that sectors dealing with countries that present deficiencies in anti-money laundering and terrorism regimes apply systematic enhanced controls. 5AMDL encourages Member States to limit their relationships with third countries that present weaknesses. The risky countries are not defined by the Commission, which will adopt the list of jurisdictions with strategic AML/CFT deficiencies provided by the Financial Action Task Force (FATF).
5AMLD requires centralised data registries to be put in place at the national level that allow FIUs and competent authorities to identify account holders and controllers in a timely manner.
5AMLD extends the scope of AML/CFT controls to virtual currencies and any virtual currency service providers. It aims to eliminate the anonymity associated with transactions in virtual currencies to prevent their fraudulent use.
In order to prevent terrorist financing, 5AMLD lowers the threshold for general purpose anonymous prepaid cards to a maximum transaction amount of EUR 150 and for remote payment transactions to EUR 50.
As the 5AMLD is not required to be transposed into national law until the 10 January 2020, it is still unclear whether the United Kingdom will be required to implement 5AMLD, considering the planned withdrawal from the European Union.
Not with standing the above, the Joint Money Laundering Steering Group (JMLSG) will be reviewing its JMLSG Guidance throughout 2019 and it is expected to include the new 5AMLD rules, which will then be applicable in the UK territory. Any changes to UK money laundering legislation due to Brexit will be reflected in the Guidance accordingly.