The European Parliament has adopted the new AML/CFT legislative package, which aims to comprehensively strengthen the EU rules to fight money-laundering and terrorist financing, including the establishing of a New EU Authority to directly supervise the riskiest entities, an EU limit on large cash payments up to EUR 10,000, and more detailed, directly applicable rules regarding customer due diligence and beneficial ownership.
The EU Commission published the new anti-money laundering and countering the financing of terrorism (AML/CFT) reform package proposals on 20 July 2021. The legislative package consists of four elements:
The Regulation establishing a new EU-level Anti-Money Laundering Authority (AMLA).
The Regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (AMLR).
The sixth AML Directive on the mechanisms to be put in place by the Member States for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, repealing Directive (EU) 2015/849 (AMLD6).
The revision of the Regulation 2015/847/EU on information accompanying transfers of funds (TFR).
The new laws include—among others—enhanced due diligence measures and checks on customers’ identity, after which the obliged entities (e.g., banks, assets and crypto assets managers, or real and virtual estate agents) must report suspicious activities to Financial Intelligence Units (FIUs) and other competent authorities.
AMLA
A new EU-level Anti-Money Laundering Authority will be established in Frankfurt to supervise the new rules on combatting money laundering. The AMLA will take over the current AML/CFT responsibilities and powers of the European Central Bank and thereby transform the supervision of AML/CFT activities in the EU. The Authority will operate as a single integrated system of AML/CFT supervision across the EU, based on common supervisory methods and convergence of high supervisory standards. Within its activities, the AMLA will directly supervise some of the riskiest financial institutions, including cryptoasset service
providers that operate at least in six Member States or require immediate action to address imminent risks. The AMLA will monitor and coordinate national supervisors responsible for other financial entities, as well as coordinate supervisors of non-financial entities. The Authority’s responsibility will include the support of cooperation among national FIUs, and it will facilitate coordination and joint analyses between them to improve the detection of illegal financial flows of a cross-border nature. Furthermore, the AMLA will also supervise the implementation of targeted financial sanctions.
AMLR
The AMLR, as the EU “single rulebook” extends the list of obliged entities to the entire crypto sector, and cryptoasset service providers will be obliged to conduct customer due diligence for transactions of up to EUR 1000 or more. The anonymous cryptoasset wallets will be also prohibited. The legislation also expands the list of obliged entities (who are subject to due diligence rules) to new bodies, including traders of luxury goods, crowdfunding service providers, and football clubs and agents (from 2029). Another key provision of the Regulation is an EU-wide limit of EUR 10,000 on cash payments, but member states will have the option of setting a lower limit. However, this limit does not apply to transactions between private individuals acting in a non-professional context. The AMLR also includes requirements on more detailed, directly-applicable rules in the area of Beneficial Ownership, and on accessibility of information on beneficial owners. Additionally, the legislation contains enhanced vigilance provisions regarding ultra-rich individuals (total wealth worth at least EUR 50,000,000, excluding their main residence). All obliged entities will be required to apply enhanced due diligence measures in relation to high-risk third countries whose AML/CTF frameworks pose a threat to the integrity of the EU’s internal market.
AMLD6
The Directive strengthens the requirements for beneficial ownership registers, and ensures that people with a legitimate interest (i.e., journalists, media professionals, civil society organizations, etc.) and competent authorities as well as supervisory bodies, will have immediate, unfiltered, direct and free access to beneficial ownership information held in national registries and interconnected at EU level. Besides the current information, the registries will also include data going back at least five years. The laws also give FIUs more power to analyze and detect money laundering and terrorist financing cases, as well as to suspend suspicious transactions.
The TFR extends the scope of the current provisions on money transfers to crypto-asset transfers made by crypto-asset providers, thus creating the possibility to track the transfer of crypto-assets.
Next steps
The legislation still needs to be formally adopted by the Council, after which it will be published in the Official Journal.
The AMLA will enter into force seven days after publication and will apply from 1 July 2025, and the AMLR will enter into force 20 days after publication and will apply 36 months from the date of entry into force, with the exception of a few articles, AMLD6 will enter into force 20 days after publication and Member States will have two years from the date of entry into force to transpose the Directive. The TFR will enter into force in Member States from 30 December 2024.
