July 09, 2018

The Fifth Anti-Money Laundering Directive has entered into force following its publication in the Official Journal of the European Union. Proposed by the Commission in July 2016, the new rules bring more transparency on the real owners of companies and tackle risks of terrorist financing. EC also published a fact sheet on the directive.

The new rules introduce stricter transparency requirements, including full public access to the beneficial ownership registers for companies, greater transparency in the registries of beneficial ownership of trusts, and interconnection of these registers. One of the key improvements is limiting the use of anonymous payments through prepaid cards, including virtual currency exchange platforms under the scope of the anti-money laundering rules. Key improvements also include widening customer verification requirements, requiring stronger checks on high-risk third countries, and more powers for and closer cooperation between national Financial Intelligence Units

The Directive also increases the cooperation and exchange of information between anti-money laundering and prudential supervisors, including with ECB. The Juncker Commission has made the fight against money laundering and terrorism financing one of its priorities.This proposal was the first initiative of the Action Plan to step up the fight against terrorist financing following the terror attacks and part of a broader drive to boost tax transparency and tackle tax abuse in the aftermath of the Panama Papers revelations. Member states will have to implement these new rules into their national legislation before January 10, 2020. In addition, in May 2018, EC invited the ESAs, including ECB, to a joint working group to improve the practical coordination of anti-money laundering supervision of financial institutions. Work in this group is now ongoing and a first exchange with member states is planned in September. 

 

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Effective Date: July 09, 2018

Keywords: Europe, EU, Banking, PMI, AML/CFT Directive, Directive 2018/843, Transparency, EC

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