January 16, 2020
In response to recent terrorist attacks in Europe, enhancements have been made to assist in the fight against terrorist financing and increase transparency in financial transactions. 5AMLD seeks to enhance 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 Politically Exposed Persons (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.
Politically Exposed Persons
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. 5AMLD 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.
The United Kingdom transposed the 5AMLD into national law on 10 January 2020 through the release of the Money Laundering and Terrorist Financing (Amendment) Regulations 2019, with further Brexit related amendments effective as of exit day through the Money Laundering and Transfer of Funds (Information)(Amendment)(EU Exit) Regulations 2019.
The Joint Money Laundering Steering Group (JMLSG) has been reviewing its JMLSG Guidance throughout 2019 and it is expected to include the new 5AMLD requirements, which will then be applicable in the UK territory. Any changes to UK money laundering legislation due to Brexit will also be reflected in the Guidance accordingly.