New EU rules against money laundering, which entered into force Monday, introduce stricter transparency requirements on the real owners of companies and strengthen the fight against terrorist financing.
The 5th Anti-Money laundering Directive, first proposed by the European Commission in July 2016, entered into force following its publication in the EU’s Official Journal.
“This is another important step to strengthen the EU framework to combat financial crime and terrorist financing,” said Justice Commissioner Vera Jourova: “The 5th Anti-Money laundering directive will make the fight against money laundering more efficient.”
The Commissioner urged the EU Member States to update their national rules as soon as possible. “We must close all loopholes: gaps in one Member State will have an impact on all others,” she added.
Stricter transparency requirements, which are introduced by the new rules, include full public access to the beneficial ownership registers for companies, greater transparency in the registries of beneficial ownership of trusts, and interconnection of these registers.
The key improvements also include: limiting the use of anonymous payments through pre-paid cards, including virtual currency exchange platforms under the scope of the anti-money laundering rules; widening customer verification requirements; requiring stronger checks on high-risk third countries as well as more powers for and closer cooperation between national Financial Intelligence Units.
The 5th Anti-Money laundering directive increases the cooperation and exchange of information between anti-money laundering and prudential supervisors, including with the European Central Bank.
The proposal forms part of a wider Commission action plan to step up the fight against terrorist financing following the terror attacks and part of a broader drive to boost tax transparency and tackle tax abuse in the aftermath of the ‘Panama Papers’ revelations.
Member States now have to implement the new rules into their national legislation before 10 January 2020. In addition, in May 2018 the Commission invited the European Supervisory Authorities (European Central Bank, European Banking Authority, European Insurance and Occupational Pensions Authority, European Securities and Markets Authority) to a joint working group to improve the practical coordination of anti-money laundering supervision of financial institutions. The Commission says work in this group is ongoing and a first exchange with Member States is planned in September.