EP ECON Committee adopts the package on Anti- Money Laundering

What’s this issue about?

At the end of March 2023, the MEPs from the Economic and Monetary Affairs Committees have adopted their position on three pieces of draft legislation on the financing provisions of EU Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) policy.

The package consists of:

• The EU “single rulebook” or AML regulation - with provisions on conducting due diligence on customers, transparency of beneficial owners and the use of anonymous instruments, such as crypto-assets, and new entities, such as crowdfunding platforms.
• The 6th Anti-Money Laundering - or 6th AML directive - containing national provisions on supervision and Financial Intelligence Units, as well as on access for competent authorities to necessary and reliable information, e.g. beneficial ownership registers and assets stored in free zones.
• The regulation establishing the European Anti-Money Laundering Authority  - or AMLA regulation -  with supervisory and investigative powers to ensure compliance with AML/CFT requirements.

What are the major points adopted?

Though the final texts still needs to be communicated and endorsed formally at the next European Parliament  plenary sitting, here are some of the major points that have been adopted with the Committees’ vote of 28th March:

• Prevention of money laundering and terrorist financing:  According to the adopted texts, entities, such as banks, assets and crypto assets managers, real and virtual estate agents and high-level professional football clubs, will be required to verify their customers’ identity, what they own and who controls the company. They will also have to establish detailed types of risk of money laundering and terrorist financing in their sector of activity and transmit the relevant information to a central register.

• Transactions in cash and crypto-assets  will be restricted and capped, with a  cap on payments that can be accepted by persons providing goods or services. They set limits up to €7000 for cash payments and €1000 for crypto-asset transfers, where the customer cannot be identified. 

• Financial Intelligence Units:  Each member state should establish a financial intelligence unit (FIU) to prevent, report and combat money laundering and terrorist financing. FIUs should share information with each other and with competent authorities as well as cooperate with AMLA, Europol, Eurojust and the European Public Prosecutor’s office.

• Information on beneficial ownership: To detect money laundering schemes and freeze assets in time, national FIUs and other competent authorities should be able to access information on beneficial ownership, bank accounts, land or real estate registers. MEPs agreed that beneficial ownership means having 15% plus one share, or voting rights, or other direct or indirect ownership interest, or 5% plus one share in the extractive industry or a company exposed to a higher risk of money laundering or terrorist financing.

• Beneficial owners’ registers: Information on beneficial ownership held in national central registers should be available digitally, in an EU official language plus English, and include current and historical information for a defined period. The entity in charge of the central register will have the right to request from corporate and legal entities any information necessary to identify and verify their beneficial owners.  This information will have to be up to date and available to FIUs, AMLA, competent authorities, self-regulatory bodies and obliged entities. Not providing accurate and adequate data to registers will be sanctioned. Entities in charge of central registers should be able to employ an adequate technology to carry out verifications.

• Access to information:  Following the latest Court of Justice ruling, MEPs decided that persons with legitimate interest, such as journalists, reporters, any other medias, civil society organisations, higher education institutions, should be able to access the register, including the interconnected central registers. Their access right will be valid for at least two and a half years. Member states will automatically renew access but also revoke it or suspend if it is abused. The legitimate interest should apply without any discrimination based on nationality, country of residence or of establishment. 

• The new authority AMLA will  ensure consistent enforcement, would monitor risks and threats within and outside the EU and directly supervise specific credit and financial institutions, classifying them according to their risk level. Initially, it would be tasked with supervising 40 entities with the highest residual risk profile and present in at least two member states. At a minimum, one entity from each member state would be chosen. To fulfil its duties, AMLA could mandate companies and people to hand over documents and other information, conduct on-site visits with judicial authorisation, and impose sanctions of €500 000 - €2 million, or 0.5-1% percent of annual turnover, for material breaches - and up to 10% of the total annual turnover of the obliged entity in the preceding business year. In their position on the draft law, MEPs wish to extend the agency’s competence to drawing up lists of high-risk non-EU countries. 

Source: EP News