The 5th EU Anti-Money laundering Directive
Money laundering, terrorism financing and organized crime consist significant problems, addressed at Union Level, as money launderers usually take advantage by the EU’s legislation to facilitate their criminal activities. Despite the fact that the (EU)2015/848 Directive set out an efficient legal framework for Member States to identify and mitigate the risks related to of Money Laundering and Terrorist Financing, recent terrorist attacks and the cases involving ML in some prestigious EU Banks have raised concerns that member states cannot ensure the implementation of AML and CTF standards. Emerging modern trends and alternative financial systems brought to light the necessity for measures, addressing terrorist financing in more effectively, aiming the increase of transparency in the EU.
For this reason, on 21st of April 2018, the EP adopted the European Commission ‘s proposal for the Directive 2018/843 (“5AMLD”). Particularly, the 5AMLD requires transparency on the real owners of company by public beneficial ownership registers for legal entities within EU. By this, everyone will have access to the essential details, such as name and address of the beneficial owner of company on bank account and therefore public scrutiny will be enhanced. In parallel, competent authorities will have unlimited access to data base on the Beneficial Owners of trusts, while legitimate interest is required for the public access. In order to improve the coordination of national and European supervising authorities, the 5AMLD requires the interconnection of the Beneficial Owner registers at EU Level, while Member States shall take any necessary act to ensure the accuracy of the information of registers.
Moreover, and for first time the 5AMLD addresses the danger arising by virtual currencies and pre-paid cards, being used for Terrorist Financing and Money Laundering. As concerns to virtual currencies, European Banking Authority in 2014 warned that virtual currency transactions are considered as high risk for the stability of financial system, due to their easily misused nature. As a response, 5AMLD broaden its scope by including virtual currency exchange platforms and custodian wallet providers as obliged entities, while 4AMLD was limited to more traditional schemes. Second, enhanced the transparency of virtual currency transactions, by creating central databases for virtual currency user’s identities and wallet addresses. Third, the 5AMLD defined key terms, as “virtual currency” and “custodian wallet provider”.
Furthermore, 5AMLD enhanced safeguards for financial transactions with high risk, non-EU countries. Particularly, new standards have been added for the assessment of high risk third countries, including the transparency of the beneficial ownership, while M-S shall ensure that apply enhanced controls on high risk cases. Among others, under the provisions of 5AMLD, Member States shall set up centralized bank account registers, containing information about the holders of bank and payment accounts. The 5AMLD has been adopted and entered into force on 9th of July 2018, while Member States have to implement these new rules into their national legislation by 10th of January 2020. The implementation of 5AMLD is significant, as response to the wave of terrorist attacks in EU the last years.
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