In this article, we will talk about the EU’s regulations about anti-money laundering with detailing its legal framework.
What’s Anti-Money Laundering And How Is It Regulated In The EU?
Anti-Money Laundering is a topic that business people have a lack of knowledge about it. EU aimed to get under control money laundering and financing terrorist attacks by creating regulations.
Over time, the EU’s anti-money laundering directives have been developed according to the current developments. EU directives based on defining client profile and risk management, internal audit, gap analysis, and also training. Practically EU directives focus on enhanced monitoring, enhanced customer due diligence, suspicious transaction reporting.
The first anti-money laundering directive was adopted in 1990 by the European Union. It was based on transparency, developing the criteria for the high-risk third countries, and improving the s for financial transactions. set up central bank account registries or retrieval systems in all Member States; improve the cooperation between anti-money laundering supervisors and the European Central Bank.
The Details Of The EU’s Anti-Money Laundering Legal Framework Is As Follows;
The Fourth Anti Money Laundering Directive implementation date was 26 June 2017. 4AMLD strengthened criteria for the risk-based approach to money laundering, requiring firms to factor geographic locations, products, services, types of transactions, and delivery channels into their customer risk profiles.
The Fifth Anti Money Laundering Directive implementation date was 10 January 2020. 5AMLD focused on obliged entities, purchase identification and persons that has exposed politically.
The Sixth Money Laundering Directive implementation date is 3 June 2021. 6AMLD will focus on emerging money laundering threats and more details about legal requirements rather than 5AMLD.
Valdis Dombrovskis, the Executive Vice-President of the European Commission (EC), the EU’s executive branch which is also responsible for legislation, revealed in middle January 2020 that the European Commission is taking AMLD5’s implementation very seriously, already drawing up infringement procedures only a month after the January 2020 deadline.
EU has an action plan for making AMLD implementation effective. Directives are downscaling with six pillars that are already settled by the EU. These are a single EU rulebook, EU-level supervision, enforcing EU-level criminal law provisions and information exchange, the EU’s global rule, effective application of EU rules, and a coordination and support mechanism for the Member States Financial Intelligence Units. Every single pillar has its own strategies under the headline.
Detection of anti-money laundering can be easier with KYC. Know Your Customer is a process that banks can identify and verify their customer. This process can help reduce the risks of illegal financial activities by following legal norms for each potential client.
It is a normal practice to open an account in a European bank but it has different criteria for EU residents and non-EU residents. Each country has its own local legal processes but at the same time with the Single Euro Payment System (SEPA), more European countries can work together. Euro area countries are part of SEPA as well as some countries without using euro they are part of SEPA too. This system makes it easier and legal for money transfer. With this system, which includes 36 countries, it is aimed to make bank accounts and money transfer more secure.
Gurcan Partners is a Foreign Economic Relations Board, Hungary Business Council, Association of German Chambers of Industry and Commerce, and International Chamber of Commerce member international law and consultancy firm.
All rights reserved. All rights of the Anti-Money Laundering article belong to Gurcan Partners. The author has no responsibility for the information in this article. This article is prepared just to inform.
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