Recent global and European developments call for the need to strengthen the EU’s efforts to combat money laundering and terrorist financing.
Data from the World Bank show that 70% of large-scale corruption cases involve the use of anonymous companies and trusts.
Recent scandals, led by the Panama Papers and the Paradise Papers, have shown how such opacity makes the current financial system vulnerable to systematic abuses.
The 5th Anti-Money Laundering Directive has been put into place to prevent the use of the financial system for the funding of criminal activities. It wants to obtain this by strengthening the transparency rules in order to prevent large-scale concealments of funds.
The absolute aim of the 5th AML Directive is to close down criminal finance without disturbing the normal functioning of financial markets and payment systems. The proposal is part of a Commission action plan against terrorist financing, established in 2016 following a spate of terrorist attacks in Europe.
In the fight against money laundering and terrorist financing, the new anti-money laundering directive also applies to bitcoins and other cryptocurrencies.
According to the new rules, no anonymous transactions may take place on cryptocurrency trading platforms. You are also no longer allowed to pay anonymously with prepaid cards. The trading platforms and providers of so-called wallets for cryptocurrencies must now identify their users, they are also Mandatory to carry out a customer survey, just as the bank and the broker already do under the existing anti-money laundering rules.
There will also be stricter rules for countering the financing of terrorist activities such as:
- limit the use of prepaid cards and tackle the risks associated with terrorists using virtual currencies;
- improve safeguards around financial transactions with high-risk third countries;
- broadening access to information on beneficial ownership,
- improving transparency in the ownership of companies and trusts;
- improve checks on transactions involving high-risk third countries.
In addition, EU countries are obliged to make their existing land registers of real estate quickly accessible to investigative services for investigating criminal practices.
Do you need any assistance to further analyze and implement those regulatory changes?
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