By Stella Hadjiloucas

On 30th May 2024, it was announced that the European Council adopted a package of new anti-money-laundering rules, with the aim of safeguarding the rights of EU citizens and to strengthen protection of the EU’s financial system against attempts of money laundering, and terrorist financing. This article aims to highlight some of the key provisions introduced under the new anti-money laundering (AML) rules.

Firstly, a new regulation will be created under the new package, which will contain all the rules applicable to the private sector. A new category of obliged entities will be subject to the new AML rules, and this includes most of the crypto-sector, traders of luxury goods and football clubs and agents. Under this regulation, more stringent protection measures will be applied, such as the imposition of a €10,000 limit for cash payments, tougher due diligence requirements, and clarification of the rules regarding beneficial ownership, to ensure a consistent and uniform application across the internal market.

At the same time, a directive will be created to assist national competent authorities to organise and co-ordinate their efforts in the fight against money laundering and terrorist financing. This will ensure that measures across with EU member states will be comprehensively harmonised, and thus strengthening protection against those who try to exploit vulnerabilities in the EU’s AML framework. For example, there will be rules determining how the Financial Intelligence Units (operating in each Member State to collect information on suspicious or unusual transactions) will work together with supervisory bodies.

One significant introduction under the new package includes the establishment of the European Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA). The European Council and European Parliament reached a provisional agreement, on the 13th December 2023, for the creation of the AMLA. On 22 February 2024, in a joint vote between the European Parliament, and representatives of each Member State, it was determined that the AMLA would have its seat in Frankfurt, Germany. It is now intended that the AMLA will begin its operations in mid-2025.

With regards to the financial sector, the AMLA will have direct and indirect supervisory powers over high-risk obliged entities, such as crypto asset service providers. An integrated mechanism will be created in co-ordination with national supervisors, to assist in determining whether obligated entities in the financial sector are compliant with their obligations in relation to anti-money laundering and countering the financing of terrorism (AML/CFT). This is of particular importance in light of the cross-border nature of financial crimes, and these measures will strengthen the efficiency of the European AML/CFT framework.

As for the non-financial sector, the AMLA is set to have a supporting role, carrying out reviews and investigate potential breaches in the application of the AML/CFT framework, and providing assistance and support to the Financial Intelligence Units of Member States. The AMLA will have the additional authority to impose pecuniary sanctions on obliged entities, if it is determined that there are serious, systemic, or repeated breaches of directly applicable rules.

Under the new AML directive, a single access point is being established, to store information submitted by Member States from centralised bank account registers. This information contains data on the ownership and location of bank accounts. However, under the AML directive, the single access point will only be accessible to the Financial Intelligence Units of each Member State.

Therefore, a separate directive has also been adopted by the EU Council, to allow national law enforcement authorities to access the registers via the single access point. Importantly, this directive also includes measures to harmonise the format of bank statements. This will make it easier for authorities to trace, and confiscate proceeds of crime, and will therefore enhance the effectiveness and protection offered under the EU’s AML/CFT legislative framework.

The texts of the regulation, and the directives, will now be published in the EU’s Official Journal and enter into force. The AML regulation will apply three years after the entry into force. Member States will have two years to transpose some parts of the AML directive and three years for others.

It is clear that the adoption of the new AML rules by the European Council will strengthen the protection of the EU’s financial system, ensuring increased transparency, and the facilitation of co-operation across Member States. The application of stricter provisions will make it harder for criminals to exploit any gaps in the legal framework.

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The details presented by MK Compliance Limited are intended for general informational purposes and should not be interpreted as formal or professional legal advice. It is recommended not to take any actions or abstain from them solely based on the information provided above. For specific guidance, it is advised to seek legal or other professional advice.