The Economic and Monetary Affairs and Civil Liberties, Justice and Home Affairs Committees have approved three pieces de draft legislation to strengthen EU anti-money laundering and counterterrorism financing (AML/CTF) rules.
The EU “single Rulebook” regulation is the first piece of legislation. It aims to standardise AML/CTF policy across a variety of domains. The bill contains provisions regarding crypto-currency and new financing methods like crowdfunding, company ownership, visas, passports, or “golden” visas, as well as the conduct of customer due diligence.
The text of the regulation was overwhelmingly supported by MEPs in the committees at 99-8. Six abstentions were recorded. The new rules require providers of gambling services to exercise due diligence when collecting winnings, wagering a stake or both for transactions exceeding EUR2,000.
Eva Maria Poptcheva, Spanish MEP, stated that “we cannot tolerate the corrupting influences of dirty money within our political system any more.” “In the wake Qatargate, Parliament heard this message loudly.
She said that “dirty money isn’t just a threat for our democracy. It also fuels inequality, injustice.” “Ordinary citizens struggle just to survive, while criminals thrive on the complicity in systemic corruption. This must stop.
There will be new caps for certain types of transactions. These include a EUR7,000 cash payment cap and EUR7,000 for cryptocurrency transfers. Customers who cannot be identified may not be identified.
Possible gambling exemption
Member states can exempt certain gambling services, “with the exception casinos”, from the new regulation. This could be done based on a proven low-risk or small-scale operation.
To be eligible for exemption, EU member states will need to conduct a risk assessment. This will include assessing potential AML/CTF vulnerabilities and mitigating factors if the gambling service is involved, as well as the risks associated with the transaction size and the payment method, and the geographical area where the gambling services are located.
It is unclear how this will actually work in practice. However, it could mean that countries that have been or are currently on the radar international money-laundering watchdogs such as the Financial Action Task Force (FATF), may be subject to an increased AML/CTF burden.
Update of 6AMLD
The legislative package’s second item is an update to the 6 th Anti Money Laundering Directive (6AMLD), first issued in 2021. The new text includes provisions to harmonise the supervision and operation Financial Intelligence Units’ (FIU) supervision and operation. These are government bodies that have been set up at the level of member states to “prevent and report” money laundering and terrorist funding.
FIUs and other competent authorities will have access to information about beneficial ownership, bank accounts, and land registers in order to detect money laundering and freeze assets.
Information about certain goods that are attractive to criminals, such as boats, planes and cars valued over EUR200,000, is also to be gathered at the level of member states. International cooperation is required between FIUs and the new EU-wide money laundering organisation.
Paul Tang, MEP said that “we are losing the fight against money laundering which costs society upto two trillion dollars annually worldwide.” “That is why parliament collaborated to find effective ways of fighting money laundering. They demanded the registration of expensive cars and boats, and required the disclosure of goods kept in free zones.
Establishment a new authority
The last piece of legislation is the European Anti-Money Laundering Authority, (AMLA). This authority will be granted supervisory and investigative powers in order to ensure compliance with AML/ CTF obligations.
The new organization will monitor EU threats and categorize financial and credit institutions according to their risk level. This body can order companies and individuals to give documents or other information. If approved by a judge, it can also conduct on-site visits and impose sanctions up to EUR2m.
Additionally, the AMLA can fine entities up to 10% of their total revenue in the previous business year.
Emil Radev, MEP, stated that it was important to distinguish between the powers of national supervisors and those of AMLA. “AMLA will not only directly supervise selected entities but also promote convergence and high standards among national supervisors.
“It will also assist us in overcoming problems that arise from a lackluster coordination between different national supervisory authorities, Financial Intelligence Units, and other countries. We hope that the new authority will provide more financial security in a trans-border environment, where there have been increasing risks.
Although it is a major step forward, the legislation must still be approved by Parliament. After the April plenary, MEPs will start negotiations to finalize the legislation.
