In addition to the creation of a new EU agency dedicated to the fight against money laundering (see other news), the European Commission presented, on Tuesday 20 July, a brand new body of EU legislation to better fight money laundering.
As committed to in its May 2020 Action Plan (see EUROPE 12482/8), the European Commission is proposing a regulation to harmonise the application of the rules across the EU (see EUROPE 12757/14).
The package also consists of a proposal for a Sixth Anti-Money Laundering Directive, which includes other provisions for which a directly applicable regulation was not considered to be the appropriate tool.
Among the major new features is the extension of the list of entities subject to EU anti-money laundering rules. The European Commission is proposing to cover all types and categories of crypto-asset service providers from now on, as well as crowdfunding services providers, which are not covered by the current EU rules, mortgage credit intermediaries and consumer credit providers that are not financial institutions, as well as operators working in the framework of residency-by-investment schemes (also called ‘golden visas’).
The European Commission is also proposing the establishment of a cross-border system to link national registers on bank accounts, in order to enable law enforcement authorities to quickly determine whether a suspect holds bank accounts in other Member States and thus facilitate financial investigations.
The rules are also more detailed in several areas, such as policies, internal controls and procedures, customer due diligence and transparency of beneficial ownership.
Beneficial ownership
On beneficial ownership, the European Commission proposes to clarify not only the obligations on legal entities and trustees to identify and verify their beneficial owners, but also their obligation to report this information to national registers of beneficial owners. Nominees are also required to report their status and to indicate the persons on whose behalf they are acting.
It introduces the obligation for third country legal entities with a link to the EU to register their beneficial owners in the EU’s beneficial owner registers.
In addition, the entities in charge of the national register of beneficial owners will be given more powers to verify that the information submitted to the register of beneficial owners is accurate, adequate and up to date, including by means of on-site checks.
Cash payments
Another key measure: the European Commission is proposing to introduce an EU-wide maximum limit of €10,000 for large cash transactions, recognising that cash is still the preferred method of payment for criminals because it is difficult to trace.
“Cash remains really important for our citizens and for the Commission. However, we want cash to be clean, we don’t want dirty cash in the system”, EU Financial Services Commissioner Mairead McGuinness told a press conference.
Many Member States have already set lower limits - and they will be able to maintain them - but others have no limits at all, she said, while expecting heated discussions on the issue between Member States.
Crypto-assets
The new proposals also align the scope of the ‘anti-money laundering’ directive - which already applies to exchanges of crypto-assets for cash - with the activities covered by the proposed Regulation on ‘Markets in Crypto-assets’ or MiCA, in particular for the exchange of one crypto-asset for another.
They also extend the possibility for Member States to require crypto-asset service providers established on their territory and having their registered seat in another Member State to designate a central contact point, as is already the case for e-money issuers and payment service providers. In addition, the opening or use of an anonymous crypto-asset account will be prohibited.
The European Commission is also proposing a revision of Regulation 2015/847, which aims to ensure full traceability of fund transfers, to extend its scope to crypto-asset transfers. Full information on the sender and recipient of such transfers will therefore now have to be included by crypto-asset service providers.
The full body of regulation should be in place and applied by the end of 2025, according to the European Commission.
See all proposals: https://bit.ly/36NPqoF (Original version in French by Marion Fontana)