New legal commentary from law firm Wilford Smith regarding the 5th Anti-Money Laundering Directive
Financial crime continues to be a thorn in the side of the EU, particularly where the financing of terrorism is concerned. The terror attacks in Paris in 2015 and Brussels in 2016 were financed by terrorists using sophisticated techniques. Both cases involved the use of pre-paid gift cards which 4MLD did not adequately cover with respect to money laundering. The Panama Papers leak of 2016 also demonstrated how corporations can use shell companies for illegal activity.
Following the fourth installment of the Anti-Money Laundering Directive (4MLD) which EU member states had to implement by 26th June 2017, the fifth installment (5MLD) is already with us. This must be implemented by member states by the 10th of January 2020, depending of course on the outcome of Brexit negotiations. For those who are itching to have some quick cash in a legitimate way, they can try games like tridewi.
What does the 5MLD do?
5MLD brings 4MLD up to speed with advancements in technology. The 5MLD has been implemented to:
Catch up with new and emerging technologies such as cryptocurrency
5MLD adds Custodian Wallet Providers and Virtual Currency exchange platforms as ‘Obliged Entities’ (OE). 5MLD also makes provision for the use of electronic identification in due diligence.
Create more Obliged Entities
As well as the aforementioned cryptocurrency platforms, Art Dealers and Estate Agents have been brought within the scope of the directive, (subject to certain minimum transaction values (a rent of £10,000pcm in the case of Estate Agents.)
5MLD creates new national bank account registers in each Member State. This enables the authorities to easily access information for bank accounts held in that member state and across the European Union.
Create tighter controls with respect to ‘high risk’ third countries
5MLD enhances due diligence measures for transactions which involve high-risk third countries. It also allows member states to prevent OEs from opening branches in high-risk third countries. Similarly, it prevents OEs based in high-risk third countries from opening branches in member states.
Increase transparency of beneficial ownership of corporates
Members of the public can now access basic information stored on member states’ central register of the ‘beneficial ownership’ of corporations. This can now be down without the prerequisite to demonstrate a ‘legitimate interest’. This brings the rest of the EU into line with the UK where this right already exists. OEs are now also obliged to report any discrepancies between the information they hold and information on the register.
Prepaid gift cards now subject to due diligence
The threshold for due diligence on gift cards and similar instruments has been reduced to €150 from the previous limit of €250.
The full text of 5MLD is available here: http://data.consilium.europa.eu/doc/document/PE-72-2017-INIT/en/pdf
Founded by Stephen Smith MBE, Wilford Smith Solicitors was incorporated in 2017 (as WS Strategic Ltd) but its history goes back much further. It has now celebrated over 30 years in the profession, becoming a most prestigious law firm with a richly deserved reputation for independence hard work and results. You can find and connect with Wilford Smith’s lawyers on Twitter, LinkedIn and Facebook.