5MLD - Tightening the net
In such a short space of time since the implementation of the Fourth Anti-money Laundering Directive (“4MLD”), and its transposition into UK law through the Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, the Fifth Anti-money Laundering Directive (“5MLD”) is edging closer. Why so soon after 4MLD? Terrorist events across Europe triggered the action to tighten regulation and controls further, as well as transparency issues arising from the Panama Papers scandal.
What has changed?
Unlike 4MLD, the changes in 5MLD are less of a paradigm shift, and more of an enhancement to the existing requirements.
- The scope of directive impacts more obliged entities, bringing in virtual currency exchanges; custodian wallet providers; art galleries and auction houses with transactions >€10k; and estate agents letting property for more than €10k per month.
- The requirements for member states to specify and keep up to date definitions of functions that would qualify as prominent public functions when considering Politically Exposed Persons (“PEPs”)
- More prescriptive steps for conducting enhanced due diligence on customers in high-risk third countries are laid out, as well as the potential for competent authorities to insist that initial payments are made through an account in the customers’ name with a credit institution subject to customer due diligence standards not less robust than 5MLD.
- Bringing about transparency on beneficial owners in member states through the maintenance of public registers, with an increased requirement for obliged persons to report discrepancies between the information gathered and the public registers.
- Further protection for those that raise suspicious activity reports.
- Further transparency on beneficial ownership of trusts and trust-like structures, including a register of beneficial ownership available to those with legitimate interests.
- Reducing the threshold for identifying customers of electronic money services and prepaid cards from €250 to €150.
How CCL can help
With our skills and experience in international AML/CTF standards, as well as the UK, we will work with you to help your Firm adopt the right approach to MLR 2017, as well as helping you gain assurance on your compliance to the new regime through the following support services:
- Advise on how to implement controls that meet the requirements of 5MLD
- Assess your risk-based approach, including business risk assessment, customer risk assessment and ongoing due diligence and monitoring arrangements
- Update your policies and procedures
- Provide advice on the new regime and operational implementation of appropriate controls
- Review your Suspicious Activity Reporting (SAR) process
- Conduct workshops with relevant employees.