European Council and Parliament strike deal on stricter rules
In an era where financial crimes and terrorism financing pose significant threats, the European Union (EU) has taken a monumental step forward with its new anti-money laundering (AML) and counter-terrorist financing (CFT) legislative package. This initiative marks a pivotal change in the EU’s approach to combating financial crimes, aiming to close loopholes and strengthen the financial system against illicit activities.
New Anti-Money Laundering System:
The provisional agreement forms the cornerstone of the EU’s revamped AML system. This reform is designed to enhance the efficiency and cooperation among national systems fighting money laundering and terrorist financing. It signifies a comprehensive approach, integrating the private sector and national institutions under a unified regulatory framework.
Harmonization of AML Rules Across the EU:
A key feature of this package is the harmonization of AML rules throughout the EU. This measure aims to eradicate the existing loopholes that have been exploited by criminals to launder money and finance terrorism. By standardizing these rules, the EU is ensuring a robust and consistent approach to combating financial crimes across all member states.
Expanded Obliged Entities:
The agreement broadens the scope of entities required to adhere to AML regulations. It now includes financial institutions, crypto-asset service providers (CASPs), luxury goods traders, and even professional football clubs and agents. This expansion reflects the evolving nature of financial transactions and the need to monitor a wider range of activities and sectors for potential abuse.
Enhanced Due Diligence and Cash Payment Limits:
Enhanced due diligence measures have been introduced, particularly for transactions involving high net-worth individuals and cross-border relationships. Furthermore, the EU has set a limit of €10,000 for cash payments, a significant move to deter large-scale cash transactions often used in money laundering.
Beneficial Ownership Transparency:
The new regulations make beneficial ownership rules more transparent and harmonized. This ensures that the actual individuals who control or benefit from legal entities are identified, preventing the misuse of complex ownership structures for illicit purposes.
Dealing with High-Risk Third Countries:
Entities are now required to apply heightened due diligence measures for transactions involving high-risk third countries. This is a critical step in safeguarding the EU’s financial system against external risks.
Financial Intelligence Units (FIUs) and Supervisory Responsibilities:
FIUs play a crucial role under the new agreement, with enhanced access to information and stronger cooperation mandates in cross-border cases. Additionally, member states are tasked with ensuring effective supervision of all obliged entities within their jurisdiction.
The agreement sets the stage for a more secure and transparent financial environment within the EU. The finalized texts, once approved, will formalize the adoption of these measures, marking a significant milestone in the EU’s ongoing battle against money laundering and terrorist financing.