Preventing abuse of the financial system for money laundering and terrorism purposes
Directive (EU) 2015/849 — prevention of the use of the financial system for the purposes of money laundering or terrorist financing
WHAT IS THE AIM OF THE DIRECTIVE?
Directive (EU) 2015/849 (4th Anti-Money Laundering Directive, 4AMLD) aims to combat money laundering* and the financing of terrorism* by preventing the financial market from being misused for these purposes.
It seeks to extend and replaces the previous Directive (EC) 2005/60 (3rd Anti-Money Laundering Directive, 3AMLD) that entered into force in 2007.
Its purpose is to remove any ambiguities in the previous directive and associated legislation, and to improve the consistency of anti-money laundering (AML) and counter-terrorist financing (CTF) rules across all EU countries. The 4AMLD also takes into account recommendations of the Financial Action Task Force (FATF) from 2012.
The directive applies to:
financial institutions; and
designated non-financial businesses and professions, such as
- external accountants
- tax advisors
- notaries and lawyers, in certain circumstances
- estate agents
- traders in goods (e.g. precious metals and stones, when payments of €10,000 or more are made in cash) and
- providers of gambling services.
reinforces rules regarding the identification of customers — especially beneficial owners* of companies and legal arrangements (trusts);
requires information on beneficial ownership for companies to be held in each EU country in a central register, such as commercial registers, companies registers or a public register;
improves awareness of and responsiveness to any money-laundering/terrorist financing (ML/TF) weakness: in addition to the national risk assessments to be carried out by EU countries, the European Commission also conducts assessments of the ML and TF risks affecting the internal market and related to cross-border activities (the first report was released on 26 June 2017);
brings about a coordinated European policy to deal with non-EU countries which have inefficient AML/CFT regimes to protect the EU financial system. The first EU list of ‘high-risk third countries’ was adopted by a delegated act by the Commission in July 2016 and the list has since been amended several times;
strengthens and improves cooperation between Financial Intelligence Units (FIUs), which are among the key actors in the fight against money laundering and terrorist financing. Systematic exchange of information between FIUs should take place through advanced technical infrastructures using FIU.NET, a decentralised computer network using a sophisticated matching technology.
Those subject to the directive must:
report suspicions of money laundering or terrorist financing to the public authorities, usually the financial intelligence unit;
take supporting measures, such as ensuring the proper training of personnel and establishing appropriate internal preventive policies and procedures;
take additional safeguards such as enhanced customer due diligence for situations of higher risk, such as trading with banks situated outside the EU and, in particular, when dealing with natural or legal entities established in non-EU countries identified by the Commission as high-risk non-EU countries.
Amendment to Directive (EU) 2015/849
After a series of terrorist attacks in Europe in 2016, Directive (EU) 2018/843 (5th Anti-Money Laundering Directive, 5AMLD) amending Directive (EU) 2015/849 was adopted in 2018. The amending directive has to become law in the EU countries by 10 January 2020. The new directive tightens the EU’s rules on preventing money laundering and terrorist financing in a number of ways including:
extending the scope of the directive to cover:
- as well as auditors, external accountants and tax advisors, any other person who offers tax consultancy services
- estate agents when acting as intermediaries in the letting of immovable property for which the monthly rent exceeds €10,000
- art dealers where the value of a transaction is €10,000 or more;
access to information on beneficial ownership thus improving transparency in the ownership of companies and trusts;
prohibiting banks from keeping anonymous safe-deposit boxes (in addition to anonymous accounts and passbooks that were already covered by Directive (EU) 2015/849);
addressing risks linked to prepaid cards and virtual currencies by
- lowering the identification threshold for prepaid cardholders from the current €250 to €150 and
- enabling national FIUs to obtain information allowing them to trace the identity of the owner of the virtual currency;
strengthened cooperation between FIUs allowing them to share more information.
Supplement to Directive (EU) 2015/848
Commission Delegated Regulation (EU) 2019/758 lays down a set of additional measures, including minimum action, that credit and financial institutions must take to effectively handle the money laundering and terrorist financing risk where a non-EU country’s law does not permit the implementation of group-wide policies and procedures at the level of branches or majority-owned subsidiaries that are part of the group and established in the non-EU country.
FROM WHEN DOES THE DIRECTIVE APPLY?
Directive (EU) 2015/849 has applied since 25 June 2015 and was originally supposed to become law in the EU countries by 26 June 2017. This deadline was, however, further extended by, several amendments, in particular Directive (EU) 2018/843, which had to be fully incorporated into EU countries’ national law by 10 January 2020.
The directive is part of a package of EU legislative measures aimed at preventing money laundering and terrorist financing that includes Regulation (EU) 2015/847 on the traceability of money transfers. It is also part of a broader EU strategy to tackle financial crime that also includes the work of:
For more information, see:
Money laundering: the conversion of the proceeds of crime into apparently clean funds, usually via the financial system, for example by disguising the sources of the money, changing its form or moving the funds to a place where they are less likely to attract attention.
Terrorist financing: the supply or collection of funds intended to be used to carry out terrorist offences.
Beneficial owner: the person who ultimately owns or controls a company.
Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ L 141, 5.6.2015, pp. 73-117)
Successive amendments to Directive (EU) 2015/849 have been incorporated in the original text. This consolidated version is of documentary value only.
Report from the Commission to the European Parliament and the Council on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities (COM(2019) 370 final, 24.7.2019)
Report from the Commission to the European Parliament and the Council assessing the framework for cooperation between Financial Intelligence Units (COM(2019) 371 final, 24.7.2019)
Commission Delegated Regulation (EU) 2019/758 of 31 January 2019 supplementing Directive (EU) 2015/849 of the European Parliament and of the Council with regard to regulatory technical standards for the minimum action and the type of additional measures credit and financial institutions must take to mitigate money laundering and terrorist financing risk in certain third countries (OJ L 125, 14.5.2019, pp. 4-10)
Report from the Commission to the European Parliament and the Council on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities (COM(2017) 340 final, 26.6.2017)
Commission Delegated Regulation (EU) 2016/1675 of 14 July 2016 supplementing Directive (EU) 2015/849 of the European Parliament and of the Council by identifying high-risk third countries with strategic deficiencies (OJ L 254, 20.9.2016, pp. 1-4)
See consolidated version.
Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 on information accompanying transfers of funds and repealing Regulation (EC) No 1781/2006 (OJ L 141, 5.6.2015, pp. 1-18)
See consolidated version.
last update 07.02.2020