The directive and regulation will strengthen EU rules against money laundering and ensure consistency with the approach followed at international level. The draft regulation deals more specifically with information accompanying transfers of funds.
The texts implement recommendations by the Financial Action Task Force (FATF), which is considered a global reference for rules against money laundering and terrorist financing. On some issues, the new EU rules expand on the FATF's requirements and provide additional safeguards.
The strengthened rules reflect the need for the EU to adapt its legislation to take account of the development of technology and other means at the disposal of criminals. The main elements are:
- Extension of the directive's scope, introducing requirements for a greater number of traders. This is achieved by reducing from €15 000 to €10 000 the cash payment threshold for the inclusion of traders in goods, and also including providers of gambling services;
- Application of a risk-based approach, using evidence-based decision making, to better target risks. The provision of guidance by the European supervisory authorities;
- Tighter rules on customer due diligence. Obliged entities such as banks are required to take enhanced measures where the risks are greater, and can take simplified measures where risks are demonstrated to be smaller.
The package includes specific provisions on the beneficial ownership of companies. Information on beneficial ownership will be stored in a central register, accessible to competent authorities, financial intelligence units and obliged entities such as banks. The agreed text also enables persons who can demonstrate a legitimate interest to access the following stored information:
- month and year of birth,
- country of residence,
- nature and approximate extent of the beneficial interest held.
Member states that so wish may use a public register. As for trusts, the central registration of beneficial ownership information will be used where the trust generates consequences as regards taxation.
For gambling services posing higher risks, the agreed text requires service providers to conduct due diligence for transactions of €2000 or more. In proven low-risk circumstances, member states will be allowed to exempt certain gambling services from some or all requirements, in strictly limited and justified circumstances. Such exemptions will be subject to a specific risk assessment. Casinos will not benefit from exemptions.
As concerns sanctions, the text provides for a maximum pecuniary fine of at least twice the amount of the benefit derived from the breach or at least €1 million. For breaches involving credit or financial institutions, it provides for:
- a maximum pecuniary sanction of at least €5 million or 10% of the total annual turnover in the case of a legal person;
- a maximum pecuniary sanction of at least €5 million in the case of a natural person.
Agreement with the European Parliament was reached on 16 December 2014. The Council's approval of that outcome paves the way for adoption of the package at second reading.
Member states will have two years to transpose the directive into national law. The regulation will be directly applicable.