DS Compliance

4th AML Directive version 2

Amendments to the 4th AML Directive

August 18, 2016

On 5th July 2016, Directive n° 2015/849/EU of 20 May 2015 (AML 4th Directive) that has not been transposed yet at national level, was amended and a proposal issued by the European Union.

The objectives of this proposal are to counter more efficiently terrorist financing and to increase tax transparency of companies.

The recent news, i.e. terrorist attacks in Paris and Brussels and the Panama Papers explain these changes.

What are the changes?

  • Transposition deadline is anticipated from 26th of June 2017 to 1st  of January  2017.

By this amendment, the European Union tends to encourage the Members States to transpose as soon as possible the new requirements on anti-money laundering and counter terrorist financing.

  • What is new on the 4th Directive version 2?
    1.  To bring virtual currency exchange platforms and custodial wallet providers under the scope of the 4th Directive. 
    2. To lower from 250 EUR to 150 EUR maximum transaction limit pre-paid instruments, above which the identification requirements apply.
    3. Electronic mean of identification is recognised as valid mean of identification.
    4. Reinforcement of the Financial Intelligence Units’ (FIUs) powers by the following means :
      • By obtaining from any financial entity all necessary information.  
      • By facilitating a quick access to information on bank account holders and payments. The 4th Directive version 2 refers to the implementation of national registries or other centralised automated systems containing all relevant information.  
      • By increasing cooperation between the FIUs in the European Union. The 4th Directive version 2 provides the interconnection between these national registries.   
    5. Set up of a compulsory list of minimum enhanced customer due diligence measures in order to increase harmonisation between the EU countries. This list applies to transactions with high-risk third countries, i.e. countries presenting strong deficiencies in their national AML/CTF system. On 14 July 2016, the European Commission has drafted a Delegated Act that includes the high-risk and non-cooperative jurisdictions as listed by the FATF.  
    6. Amendments relating to beneficial ownership information of companies, trusts, foundations and other type of legal arrangements :
      • Set up of national registries containing beneficial ownership information, in the Member State where the company is established or the trust is administered.
      • Beneficial ownership identification :

        Same threshold of 25% of shareholding or ownership interest in companies involved in commercial activities.

        New threshold of 10% of shareholding or ownership interest in companies, trusts, foundations and other type of legal arrangements, which present a specific risk of being used for money laundering and tax evasion. In this regard, the 4th Directive version 2 refers explicitly to Passive Non-Financial Entities.

        Review of the identification process for existing customers due to this new threshold.

        Review of the identification process for trusts, foundations and other type of legal arrangements due to AML/CTF risk.

      • Access conditions to beneficial ownership information:

        Non-limited access by FIUs and by any other national competent authorities on AML/CTF matters, including tax authorities.

        Public access to information of companies and trusts involved in commercial activities.

        Limited access based on legitimate interest to information of companies, trusts, foundations and other type of legal arrangements, which present a specific risk of being used for money laundering and tax evasion, including Passive Non-Financial Entities.

        Possible exemption from such access to all or part of the information on the beneficial ownership on a case-by-case basis. It concerns  the beneficial owner subject  to the risk of fraud, kidnapping, blackmail, violence or intimidation, or where the beneficial owner is a minor or otherwise incapable

      • Interconnection of national registries containing beneficial ownership information.

Finally, the 4th Directive version 2 specifies that all proposed provisions are applicable in compliance with the reformed data protection regime, as referred, i.e. Regulation 2016/679/EU and Directive 2016/680/EU.  

 

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