The AML/CFT system is mainly governed by the 4th European anti-money laundering directive (EU Directive 2015/849). This European directive has consolidated and harmonized the measures taken in the field of financial system supervision. It also defined a legal framework by requiring member states to identify, and mitigate the risks of money laundering and terrorist financing.
The terrorist attacks and tax evasion scandals have led the regulator to adapt to the evolving patterns of fraud and terrorist financing. It is in this context that the 5th European anti-money laundering directive (EU Directive 2018/843) was put in place, aiming to facilitate cooperation and information exchange between member states but also within insurance and banking groups.
The main measures of the 5th anti-money laundering directive
The 5th Anti-Money Laundering Directive has mainly put in place 6 measures:
- An extension of the scope of application of the 4th anti-money laundering directive.
AML/CFT regulations are now applicable to players in the crypto-asset sector, as well as to art dealers, real estate agents and accountants. The subjection of crypto-assets to AML/CFT regulations will thus result in putting an end to the anonymity allowed by this type of product by imposing identity verification and know-your-customer procedures.
- Strengthening vigilance measures with regard to high-risk third countries.
This reinforcement is reflected in particular by a broadening of the criteria for the identification of these third countries. This new evaluation method will be used by the European Commission to update the list of countries with significant deficiencies in the fight against money laundering and terrorist financing. This directive also defines the additional due diligence measures to be implemented when an operation involves a high-risk country.
- The creation of a unique list of identification of the PPE.
The 5th European anti-money laundering directive also aims to identify PEPs more easily by creating a list of all important public functions, with the help of the member states.
- Strengthening international cooperation.
- The reinforcement of the transparency of information relating to beneficial owners.
In order to increase the transparency of information on beneficial owners, the 5th Anti-Money Laundering Directive has made the register of beneficial owners of companies and other legal entities accessible. In addition, the obligation to collect information on beneficial owners is extended to trusts and fiduciaries. Finally, by March 10, 2021, the registers of the Member States must be interconnected through a European platform.
- Strengthening the monitoring of electronic money.
Transposition of the 5th Anti-Money Laundering Directive
The Fifth European Anti-Money Laundering Directive was transposed into French law by Order 2020-115 and Decrees 2020-118 and 2020-119 of February 12, 2020. This transposition entails important changes in the scope of the AML/CFT regulations and in the due diligence requirements. Other evolutions also have an impact on the obligation to report suspicious transactions.
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