On 28 March 2023, the European Parliament adopted its position on the European Union’s anti-money laundering package. The new EU rules are intended to close the gaps that exist in combating money laundering and terrorist financing.
The AML package consists of (i) an anti-money laundering regulation, (ii) the 6th Anti-Money Laundering Directive, (iii) a regulation establishing a European Anti-Money Laundering Authority (“AMLA”) and (iv) an update to the Wire Transfer Regulation.
The position adopted by MEPs on the AML package includes the following:
1. Expansion of companies’ due diligence obligations
The texts adopted by the majority of MEPs oblige entities such as banks, asset and cryptoasset managers, real estate agents and, in future, professional football clubs to verify the identity of their customers and to establish the beneficial owners.
2. New caps for transferring cash and cryptoassets
To reduce the abuse of cash and cryptoasset transactions for (financial) crime, MEPs want to cap cash payments at EUR 7,000 and cryptoasset transfers at EUR 1,000 (newsletter of 24 November 2022). Above those limits, companies obliged under anti-money laundering laws will be required to identify their customers, among other things.
3. “Golden passports” banned
In view of the considerable risk of abuse, parliamentarians want to ban all “trading” in citizenships so as to prevent citizenships (“golden passports”) and residence (“golden visas”) of EU Member States being granted in exchange for investment.
4. More transparency through beneficial ownership registers
In future, Member States are to collect and make available more information on beneficial owners. Competent authorities (particularly the AMLA and national FIUs) are to be given the ability to access beneficial ownership registers, bank accounts, and land and property registers, for example.
Additional information on their ownership is to be collected and made available for certain commodities that are particularly susceptible to money laundering – including high-value goods such as yachts, planes and cars worth more than EUR 200,000 and goods stored in free zones.
5. Lower beneficial ownership thresholds
Individuals who hold more than 15% of the capital or voting rights or other direct or indirect ownership interest in a company will in future be considered beneficial owners. For companies in the extractive industry or other high-risk areas, a threshold of 5% is to apply.
6. Legitimate interest in accessing beneficial ownership registers
Following the latest European Court of Justice ruling (newsletter of 25 November 2022) , MEPs decided that persons with legitimate interest – such as journalists and higher education institutions – should also be able to access Member States’ beneficial ownership registers. Their right of access will be valid for at least two and a half years. Member States are to automatically renew access, but will also be able to revoke or suspend it if abused.
7. New EU Money Laundering Authority (AMLA) to ensure consistent enforcement
The new EU Money Laundering Authority will monitor compliance as well as risks and threats within and outside the EU, and directly supervise specific high-risk credit and financial institutions. It will also be able to impose sanctions (in particular fines of several million euros) for material breaches. The EU has not yet decided on the seat of the authority.
8. Outlook
The vote in the European Parliament is another step in the EU’s fight against money laundering and terrorist financing. The new regulations are provisional and may still change during the ongoing legislative process. However, they underline the thrust of European legislature to take (even) stronger action against violations of anti-money laundering laws in the future. Businesses obliged under AML laws are therefore advised to implement adequate precautions to combat money laundering and terrorist financing, and to critically review existing structures.
The vote in the European Parliament also provided a mandate for the trilogue negotiations to be announced in the plenary session scheduled for 17 April 2023. In the subsequent trilogue procedure, the European Commission, the European Parliament and the Council of the European Union will negotiate a final version of the legislative texts.
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