AML Package: EU Council Publishes Key Regulatory Texts

On May 20, 2024 the official text of several important legislative papers aiming at bolstering the EU's fight against money laundering and terrorist funding was made available by the Council of the European Union on May 20, 2024. Among these documents are:

• A law that creates the Authority for Combating Terrorism Financing and Anti-Money Laundering, and modifies EU Regulations Nos. 1093/2010, 1094/2010, and 1095/2010 (2021/0240(COD)), among others.

• Regulation 2021/0239(COD) prohibiting the use of the financial system for financing terrorism or money laundering.

• A directive defining the steps that Member States need to take to stop the financial system from being abused for the purpose of financing terrorism or money laundering. Directive (EU) 2019/1937 is amended by this directive, which also repeals and modifies Directive (EU) 2015/849 (2021/0250(COD)).

The proposed legislation was approved by the European Parliament on April 24, 2024, before to its release. The actual acceptance of these legislative texts by the EU Council is the next stage, following which they will be published in the EU Official Journal.

Source

[1]

EU AML Framework: Overview of the Proposed AML Package

The EU proposes an Anti-Money Laundering package to strengthen AML and CTF rules, including a single rulebook regulation, the 6th AML Directive, and the establishment of a European AML Authority in Frankfurt, Germany.

GrandAlessandro Micagni

[2]

Council of EU publishes texts of AML package

On 20 May 2024, the Council of the EU published the text of the: Regulation establishing the Authority for Anti-Money Laundering and Countering the

Global Regulation TomorrowSimon Lovegrove (UK), Floortje Nagelkerke (NL)

European Parliament Adopts Enhanced Anti-Money Laundering Laws

A comprehensive set of regulations aimed at strengthening the European Union's ability to tackle money laundering and terrorist financing has been passed by the European Parliament. These new regulations guarantee rapid, unfiltered, direct, and free access to beneficial ownership information for those with a legitimate interest, including journalists, media professionals, civil society organizations, competent authorities, and supervisory bodies. This data, which spans the previous five years, is kept in national registries that are now integrated at the EU level.

The regulations also provide Financial Intelligence Units (FIUs) more ability to investigate and find evidence of money laundering and terrorism financing. Additionally, these units have the power to halt transactions that seem suspicious.

Enhanced Due Diligence Measures Under New EU Anti-Money Laundering Laws

A comprehensive set of legislation has been put in place by the European Union with the goal of bolstering due diligence procedures in the fight against money laundering and terrorist funding. The aforementioned rules impose rigorous identification verification and reporting obligations on diverse financial institutions, and their extended reach is expected to affect even the most valuable transactions in professional sports.

• Better Customer Identity Verifications:

• Banks, asset managers, cryptocurrency asset managers, real estate agents, and virtual estate brokers are among the companies that are required to perform comprehensive identity checks on their clientele.
• Reports of any suspicious activity must be sent to the appropriate authorities, including Financial Intelligence Units (FIUs).

• Profession Football Teams Are Included:

• Top-tier professional football teams will have to monitor transactions, confirm the identity of their customers, and report any suspicious activity to Federal Bureau of Investigations (FBIs) as of 2029 when they are involved in high-value transactions with investors or sponsors.
• This covers player transfers and transactions with advertisements.

• Keep an Eye on Extremely Rich People:

• A person with a total worth of at least EUR 50 million, excluding their primary residence, is the target of enhanced vigilance measures.
• The law caps cash payments at EUR 10,000 across the EU, unless they are made between private individuals in an informal setting.

• Observation of Financial Sanctions:

• The new legislation contain provisions to guarantee compliance with specific financial consequences.
• Mechanisms for preventing the evasion of these sanctions have been established, fortifying the EU's overall framework for financial security.

Establishment of Central Watchdog AMLA to Enforce New EU Anti-Money Laundering Rules

The Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) is in the process of being established, which is a major step toward bolstering the European Union's capacity to fight money laundering and terrorist financing. AMLA, which has its headquarters in Frankfurt, will be crucial to upholding the strict anti-money laundering regulations that the EU has put in place.

• Important Function of AMLA:

Providing direct monitoring of the highest-risk financial companies is AMLA's main duty. AMLA seeks to mitigate the risks associated with illicit financial operations by ensuring rigorous compliance with anti-money laundering rules through the assumption of direct supervision responsibilities.

• Roles and Accountabilities:

• Direct Supervision: AMLA will keep a careful eye on high-risk financial institutions to make sure anti-money laundering regulations are followed. The goal of this proactive approach is to quickly detect and reduce any potential problems.

• Intervention Mechanism: In order to address deficiencies and maintain regulatory requirements, AMLA will step in when supervisory failures occur. This intervention method is an essential preventative measure against noncompliance.

• Central Coordination Hub: AMLA will serve as the focal point for supervisory efforts and enable smooth coordination amongst national supervisory authorities. AMLA seeks to improve the efficiency of anti-money laundering initiatives throughout the European Union by optimizing communication and information sharing.

• Dispute Resolution: In order to guarantee the uniform execution of anti-money laundering regulations, AMLA will be essential in mediating disagreements amongst supervisory authorities, encouraging cooperation, and resolving conflicts.

• Penalties Oversight: In order to guarantee consistent enforcement and compliance amongst EU member states, AMLA will supervise the application of specific financial penalties.

The Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) package, which includes the EU "single rulebook" law, the Anti-Money Laundering Authority (AMLA) regulation, and the sixth Anti-Money Laundering (AML) directive, forms the foundation for AMLA's existence. The European Parliament strongly supported the adoption of these legislative measures, which laid the groundwork for AMLA's mandate to strengthen the EU's anti-money laundering framework.

Timeline and Implementation Details for New EU Anti-Money Laundering Measures

EU Council formal endorsement of the legislative measures intended to strengthen EU anti-money laundering framework is still pending. They will be published in the EU Official Journal upon endorsement, which will be a major step in strengthening financial integrity throughout the EU.

The enforcement of the AML Regulation will commence 36 months after it is published in the Official Journal, with the exception of certain required companies that must comply within 60 months. The AMLA Regulation is scheduled to go into effect on July 1, 2025, with different clauses going into effect at different times.

After it is published in the Official Journal, the Sixth Money Laundering Directive will go into effect, and member states will have a set amount of time to pass the necessary legislation. FAQs and implementation schedules have been included in the legislative package guidelines provided by the European Commission. Gradual adaptation is ensured via the phased method, with complete implementation expected by mid-2027. By now, it is anticipated that important policies pertaining to cryptoassets, the operationalization of AMLA, and technical standards will be established. Furthermore, some changes that have an impact on the football industry and real estate access will also be implemented gradually, with full implementation expected by 2029.