The 6th European Directive: AMLD 6
In order to strengthen the fight against money laundering, the European Parliament published on 12 November 2018 new rules constituting the 6th European Directive (2018/1673) which entered into force for Member States on 3 December 2020. Financial entities will have to apply it from 3 June 2021.
This new directive seeks to combat money laundering by means of criminal law. It represents a new step in the completeness of the AML-CFT system.
What are the new specificities of the 6th European Directive?
AMLD 6 provides a more comprehensive definition of money laundering across the EU to limit negligence in Member States' laws. It therefore provides a list of 22 money laundering offences that all Member States will have to take into account in their national legislation. Moreover, this new directive includes cybercrime in these offences, unlike previous directives. That's why it's important for companies to adapt and scale up their AML/CFT program to ensure compliance.
2. Expansion of conduct constituting a criminal offence
From now on, "complicity" and "facilitation" will be considered money laundering in their own right and will be subject to the same judicial sanctions. By "complicity", this new directive refers to any person who assists, participates in or incites a crime of money laundering.
3. Strengthening the criminal liability of legal persons
According to AMLD 6 "A legal person will be considered guilty of the crime of money laundering if it is established that it has not prevented a 'directing mind' of the company from carrying out the illegal activity." Sanctions are increased, such an offense can lead to a temporary ban on operation until the definitive closure of the establishment.
This extension of the criminal liability of legal entities is intended to involve large companies more in their commitment against money laundering and the fight against the financing of terrorism.
4. Increasing punitive measures
AMLD 6 intensifies the punitive measures already in place. The minimum prison sentence is now 4 years for money laundering. In addition, Member States must provide for additional measures and sanctions to limit the financial impact. These sanctions can start with a simple fine and end with a temporary ban on engaging in commercial activities.
This is why it becomes essential for legal and natural persons to take the necessary measures to ensure their compliance in order to strengthen the global effort in the fight against fraud, money laundering and terrorist financing.
5. Cooperation between Member States
AMLD 6 aims to improve cross-border cooperation between Member States.
Now, the crime of money laundering can involve dual criminality, i.e. the principle that a crime can be committed in one jurisdiction before its financial proceeds are laundered in another. This new directive addresses this issue by intensifying information sharing between jurisdictions, so that legal proceedings can take place in more than one EU Member State.
In addition, the introduction of new investigation rules and tools will make it possible to identify the competent Member State when a crime falls within the competence of several Member States.
It is therefore essential for financial and non-financial institutions to inform themselves about the updates of regulations, the expansion of responsibilities and sanctions, in order to adapt their AML-CFT systems and procedures. They must also strengthen their internal control in order to limit the risk of infringement. Finally, it is important to provide training on these new offences and regulations to the concerned professions, to ensure their compliance.
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