“From Strength to Strength: The AML Industry in 2020”

As European Members implemented and applied the requirements of the 4th AML Directive in 2016, upgraded proposals were drawn up by the European Commission for a new legislative initiative improving the loopholes in the existing Anti-money laundering legislation. Particular concern was the growth of money laundering and terrorist financing as it was seen in the case of Panama Papers revelations which shed light on crucial deficiencies in the ecosystem. Furthermore, the increased reputation of virtual currencies, have also brought onboard new regulatory challenges.

The proposal was developed to the Fifth Anti-Money Laundering Directive (“5th AMLD”) which was published in the Official Journal of the European Union in June 2018. Member States are obliged to transpose the revised Directive into national law by the 10th January 2020. The revised legal framework of the 5th AML Directive has evolved series of measures; the following consists of utmost important

Beneficial Owner Registers
Access to the beneficial ownership information of legal entities will be publicly available through a central register. Data on the beneficial owner of trusts will also be accessible without any restrictions; specifically, to the competent authorities, Financial Intelligence Unites (FIU) and the professional sectors that implement Money Laundering rules (such as lawyers, banks). Additionally, the data on the beneficial owner of trusts will be accessible to other persons who can demonstrate a legitimate interest.

Prepaid Cards
The anonymous use of electronic money products will be allowed by the Member States in situations where a) the customer purchase products by using a prepaid card  directly in the shop up to the amount of €150 (was €250) and b) the customer executes an online transaction by using a prepaid card  below the amount of €50  (was €100).

Increasing the powers of EU Financial Intelligence Units
The power of Financial Intelligence Units (FIUs) will be extended by accessing on additional information through centralized bank, payment account registers or data retrieval systems. FIUs from all over European Countries will be able to cooperative more easily together as well as with other competent authorities.

High Risk Countries and Checks on Transactions engaged in such Countries
Stricter measures were introduced by the 5th AML Directive when assessing business relationship with clients that are founded in high risk countries. Member States accepting higher risk jurisdictions have to ensure that enhanced systematic controls apply. Such controls include the additional monitoring and checks on the financial transactions with counterparts from and to high risk countries.

Virtual Currencies
Member States have the obligation to ensure that the wallet providers as well as virtual currencies platforms are fully registered with the competent authorities and shall be required to implement the anti-money laundering rules as the other obliged entities. These new actors will not only have to apply customer due diligence and transactions monitoring, but they also have to report any suspicious activity to the Financial Intelligence Units.

The new procedures aim to:
  • Enhance transparency as to who are the real owners of legal entities and trusts.
  • Increase the power of FIUs by having better access to information and data.
  • Tackle terrorist financing risks related to the anonymous usage of virtual currencies and prepaid cards.
  • Extend the measures when assessing high risk countries to safeguard movements from such countries.

For more information concerning the amendments on the 5th AML Directive can be found here.

Contact Details:
AML Compliance Office
Bybloserve Management Ltd
Patron 10, CY-6051, Larnaca, Cyprus
Tel: +357 24812575, Fax: + 357 24812583


The information contained in this document is for general information purposes only and is not intended to address the circumstance of any particular person. The information is provided by BYBLOSERVE MANAGEMENT LIMITED in association with I. FRANGOS & ASSOCIATES LLC and while we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, expressed or implied, about the completeness, accuracy, reliability and suitability of this information, which in any case should not be used as to substitute consultation by professional advisors.

RELATED NEWS

“From Strength to Strength: The AML Industry in 2020”
COVID-19 Important Announcement
Abolition of Bank Guarantees
BVI Substance Legislation