On the 5th of February 2013 the EU Commission adopted proposals for the 4th EU AML Directive. These proposals will be sent forward for negotiation and adoption. It is expected that the proposals will be debated at a public hearing on 15th March 213. Once the text has been finalised and adopted at a European level, the Directive must be transposed into national legislation within a period of two years.

Purpose

The purpose of the Directive is to improve clarity and consistency of rules across all Member States. The proposed changes are now outlined:

• PEPs – PEPs will be extended to include domestic PEPs, including their families and close associates.

• Simplified CDD-  Designated persons must justify the application of Simplified CDD on a number of factors. It will no longer be merely ticking a box that they are a specified customer or a specified product.

• Beneficial Owners: Legal requirement that all body corporates and legal entities must hold adequate, accurate and current information on their beneficial ownership. They will be required to allow access to this information by designated persons.

• Extend the scope of AML legislation to cover the entire Gambling sector . Also proposed to create a new predicate offence for tax crimes.

• Designated person must undertake documented risk assessments and that these must be current and up to date.

• New rules to clarify that branches and subsidiaries situated in other Member States must also comply with host state rules.

• EBA, EIOPA and ESM will also provide an opinion of the risks of their sector. This will enable entities to conduct appropriate and relevant risk assessments.

• Amend the current Country of Equivalence regime. The existing regime was critiscised by FATF as providing automatic exemption from certain requirements without being founded on basis of risk.

• It also aims to strengthen the cooperation between the different national Financial Intelligence Units (FIUs) whose tasks are to receive, analyse and disseminate to competent authorities reports about suspicions of money laundering or terrorist financing.

For a copy of the 4th EU AML proposals click here