On 20 May 2015, the European Parliament voted to adopt the Fourth Anti-Money Laundering Directive and Regulation (AML IV). The Council had already adopted the package in April, following political agreement that had been reached between the European legislators last December.
AML IV implements recommendations by the Financial Action Task Force (FATF), which is considered a global reference for rules against money laundering and terrorist financing. On some issues, AML IV expands on the FATF’s requirements and provides for additional safeguards.
The key amendments that AML IV makes to the existing regime are as follows:
- The extension of the Directive’s scope – AML IV extends requirements to a broader range of entities.
- The application of a risk-based approach – Member States will be required to assess and identify risks and use those assessments to, where necessary, identify areas where an entity should apply enhanced AML measures.
- Stricter rules on customer due diligence – entities such as banks are required to take enhanced measures where the risks are greater and can take simplified measures where risks are smaller.
AML IV introduces provisions relating to the beneficial owners of companies. Information on beneficial ownership will be stored in a central register which will be accessible to competent authorities, financial intelligence units and entities such as banks. Access will also be given to persons who can demonstrate a legitimate interest in the stored information.
AML IV provides for a maximum fine of at least twice the amount of the benefit derived from the breach or at least €1 million.
For breaches involving credit or financial institutions, it provides for a maximum fine of at least:
- €5 million or 10% of the total annual turnover in the case of a legal person
- €5 million in the case of a natural person
The Directive and Regulation will now be published in the Official Journal. They will enter into force 20 days thereafter. Member states will then have two years to transpose the Directive into national law (mid-2017). The Regulation will also apply from that date.