New AML/CTF laws pass European parliament committees

Economic and Monetary Affairs and Civil Liberties, Justice, and Home Affairs committee MEPs passed three proposed laws to tighten EU AML/CTF requirements.

The first law is the EU "single rulebook" regulation, which standardises AML/CTF policy across multiple areas. The bill covers crypto-currency, crowdfunding, firm ownership, "golden" passports or visas, and customer due diligence.

The legislation was approved by committee MEPs 99-8, with six abstentions. Under the new rules, gaming service providers must use due diligence while collecting winnings, wagering a stake, or both for transactions over €2,000.

“We cannot tolerate the corrupting influence of dirty money in our political system any longer,” said Spanish MEP Eva Maria Poptcheva. “In the wake of Qatargate, parliament heard this message loud and clear.

“Dirty money is not just a threat to our democracy, it also fuels inequality and injustice,” she added. “Ordinary citizens struggle to make ends meet while criminals prosper with the complicity of systemic corruption. This has to end.”

Cash payments and cryptocurrency transfers without customer identification will have €7,000 limitations.

Gambling exemption?

Member states can exempt gaming services "excluding casinos" from the new regulations. The business's small size or minimal risk may justify this.

EU Member States must conduct a risk assessment of the gambling service's AML/CTF vulnerabilities and mitigating factors, transaction size, payment method, and geographic location to qualify for an exemption.

It is unclear how this will operate in practise, but it may imply that jurisdictions on the radar of international money-laundering watchdogs like the Financial Action Task Force (FATF) may face a greater AML/CTF burden.

6AMLD update

The second part of the legislative package updates the 2021-issued sixth Anti-Money Laundering Directive (6AMLD). The revised article harmonises the supervision and functioning of member state Financial Intelligence Units (FIU), which "prevent, report, and combat" money laundering and terrorist financing.

FIUs and "other competent authorities" must have access to beneficial ownership, bank accounts, and land registry to detect money laundering and freeze assets.

Yachts, planes, and cars over €200,000 that criminals might want are to be aggregated by member states. The new regulation requires FIUs to cooperate internationally and with the new EU-wide money-laundering organisation.

“We are losing the battle against money laundering, which costs society up to two trillion US dollars annually worldwide,” said MEP Paul Tang. “That is why parliament worked together on finding effective ways to fight money laundering, by demanding the registration of expensive cars, boats and planes and by obliging the disclosure of all goods stored in free zones.”

New authority

The final bill gives the European Anti-Money Laundering Authority (AMLA) monitoring and investigative powers to ensure AML/CTF compliance.

The new organisation would monitor EU and non-EU threats and risk-classify banking and credit institutions. The organisation can order corporations and individuals to hand over documents and other information, conduct on-site visits if permitted by a judge, and issue penalty of up to €2m, or 0.5-1% of annual income, for rule violations.

The AMLA can also fine businesses 10% of their previous year's income.

“We need to draw a clear distinction between national supervisors’ powers and the direct supervisory powers of AMLA,” said MEP Emil Radev. “In addition to directly supervising selected entities, AMLA will promote high standards, convergence and the creation of a common culture among national supervisors.

It will also help us solve coordination issues between national supervisory authorities and financial intelligence units. In a cross-border context with rising hazards, we expect the new authority will provide better financial security.”

The package needs parliamentary approval after passing through committees. After the April plenary, MEPs will negotiate legislation.

By fLEXI tEAM