Fifth EU Anti-Money Laundering Directive adopted
The Fifth EU Anti-Money Laundering Directive (5AMLD) has just been adopted. The new anti-money laundering rules are particularly aimed at preventing terrorists' and other criminals' use of electronic funds and virtual currency exchange platforms. The Directive is to be implemented into national law by 10 January 2020. In the following, Plesner's anti-money laundering legislation specialists will set out the key amendments to 5AMLD.
The completion of the previous, Fourth, Anti-Money Laundering Directive in 2015 coincided with the terrorist attacks in Paris and Brussels which illustrated that terrorists were extensively able to use new forms of anonymous financial products, for example electronic currencies and virtual currencies, which were exempted from standard customer due diligence measures. The terrorists were thus able to finance their activities around the anti-money laundering control measures that apply in relation to "traditional" financial products. Already shortly after the adoption of the Fourth Anti-Money Laundering Directive it therefore became clear that the European Commission wished to amend the Directive and, among other things, reduce or completely remove the exemptions relating to electronic currencies, and also include the virtual money market within the scope of the Directive. With 5 AMLD, these amendments have become a reality with effect from 10 January 2020 at the latest.
The key amendments to 5AMLD are set out below.
Virtual currenciesFor the first time, certain market participants are included in the market for virtual/digital/cryptocurrencies such as Bitcoin, Litecon, etc., as obliged entities under anti-money laundering legislation. The specific participants are "providers of exchanging services between virtual currencies and fiat currencies" and "custodian wallets providers". The purpose of including precisely these market participants under the anti-money laundering legislation is that they are perceived as the central points of contact between the virtual currency market and the traditional financial system.
In this connection a registration obligation is introduced with respect to "providers of exchanging services between virtual currencies and fiat currencies" and "custodian wallet providers".
Electronic money productsNational authorities' possibilities of exempting electronic money products from the requirements for customer due diligence are made more stringent, and the monthly transaction limit for reloadable products as well as the limit for the stored value are reduced from EUR 250 to EUR 150. Furthermore, the Member States' possibility of increasing the limit for the stored value to EUR 500 is removed.
Likewise, the limit as to when customer due diligence is to be conducted in connection with cash disbursements from electronic money products is reduced from EUR 100 to EUR 50, regardless of the exemptions.
Finally, the Member States are ordered to ensure that acquirers only accept payments by anonymous prepaid money products from third countries if such products comply with requirements corresponding to the exemptions in 5AMLD. In addition to this, the Member States get an opportunity to completely prohibit payment by anonymous prepaid cards.
High-risk third countries
Detailed demands to enhanced customer due diligence measures are introduced in relation to customers from identified high-risk third countries, and enhanced demands to ongoing monitoring of such customer relationships are also introduced.
Subject to the European Union's international obligations, each Member State is moreover allowed
- to refuse obliged entities from high-risk third countries to establish themselves in the Member State
- to prevent obliged parties from the Member State to establish themselves in high-risk third countries
- to demand enhanced supervisory and/or audit steps in relation to branches and subsidiaries in high-risk third countries
- to demand that financial services companies change or terminate correspondent relationships with respondents in high-risk third countries.
The following other amendments to 5AMLD should also be noted:
- art dealers, galleries, auctioneers and other intermediaries in the art world are now subject to anti-money laundering legislation if the value of a transaction is at least EUR 10,000
- persons storing, trading or facilitating the trading of works of art, including freeports [sic], are now subject to anti-money laundering legislation if the value of a transaction is at least EUR 10,000
- the time limit for implementation of customer due diligence with respect to anonymous accounts or passbooks is brought forward to 10 January 2019 (or the earliest time that the account or passbook in question is used) and is expanded to also apply to anonymous safe-deposit boxes.
- Each Member State is obliged to establish a register of politically exposed persons (PEP) corresponding to that which is already established by Denmark, and based on this the European Commission is to establish a consolidated Union-wide PEP register.