The European Council and Parliament have come to an agreement on the first Anti-Money Laundering Regulation and the new Anti-Money Laundering Directive. The regulation is expected to be a new EU “single rulebook” regulation, where the EU is introducing a directly applicable regulatory framework with requirements for obliged entities. In conjunction with the regulation, the sixth Anti-Money Laundering directive, includes rules on the organisation of institutional Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) systems at national level which requires the member states to transpose such rules into their own legal system.

The key proposals of the framework include:

• Aligning, where appropriate, with the Financial Action Task Force’s international AML/CTF standards,
• Enhancing risk assessment synergy at both supranational and national levels,
• The extension of scope of the obliged entities to the crypto-asset service providers, traders in luxury goods (such as precious metals and stones, jewellers and goldsmiths, luxury cars, airplanes yachts and cultural goods such as artworks), operators involved on behalf of third country nationals in the context of investor residence schemes, professional football clubs and agents,
• Bolstering verification processes for beneficial owners, especially concerning entities with international ties and real estate engagements,
• Clarification of the rules on access to beneficial ownership registers and retains the beneficial ownership threshold at 25%. Further rules to harmonise the approach to the identification of beneficial ownership are also laid down, including rules applicable to multi-layered ownership and control structures,
• Extension of the scope of those with access to beneficial ownership registers beyond supervisory and public authorities and obliged entities to also include persons of the public with legitimate interest (such as the press and civil society),
• Requirement for obliged entities to apply enhanced due diligence measures for cross-border correspondent relationships for crypto-asset service providers, business relationships with high net-worth individuals and those involving high-risk third countries,
• A European Union-wide limit on large cash payments of 10,000 euro,
• Measures to ensure compliance with targeted financial sanctions and avoid sanctions being circumvented.

As a part of this process an Anti-Money Laundering Authority (AMLA) will also be established, and which is expected to begin operations by mid-2025. As money laundering is a cross-border financial crime, the AMLA will strengthen the EU’s AML/CFT framework by creating an integrated mechanism with national supervisors in the member states to ensure that obliged entities comply with their obligations.

AMLA’s role will be to:

• directly supervise some of the riskiest credit and financial institutions in the EU, including crypto-asset service providers,
• play a supporting role for the non-financial sector,
• coordinate Financial Intelligence Units in the member states,
• impose pecuniary sanctions in the event of serious breaches.

The AMLA will be based in Frankfurt.

Following technical review, the resulting compromise legal texts were published earlier this week. In order to step forward the referred deal needs to be formally adopted by Parliament and Council before it can come into force.

The texts can be accessed:

AMLD6

https://data.consilium.europa.eu/doc/document/ST-6223-2024-INIT/en/pdf

AMLR

https://data.consilium.europa.eu/doc/document/ST-6220-2024-REV-1/en/pdf

AMLAR

https://data.consilium.europa.eu/doc/document/ST-6222-2024-INIT/en/pdf