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Anti-Money Laundering Directives
The EU Anti Money Laundering Directives (AMLDs) are issued periodically by the European Parliament to be implemented by Member States as part of domestic legislation.
Essentially all regulated entities need to apply customer due diligence requirements for business relationships (i.e identify and verify the identity of clients, monitoring and reporting suspicious transactions). Over the past three decades, the European Union (EU) has regularly improved its framework to fight money laundering and terrorist financing and guarantee a consistent approach to AML legislation with the single market and protect the financial system.
The EU Anti Money Laundering Directives (AMLDs) are issued periodically by the European Parliament to be implemented by Member States as part of domestic legislation. Every directive includes new additions or updates regulatory obligations on member-state governments.
Since 2015, the EU adopted a modernised regulatory framework incorporating the following Anti Money Laundering Directives (AMLDs):
6th AML Directive
The EU’s 6 AML Directive (6 AMLD), which came into effect 3 December 2020 and must be implemented by regulated entities by 3 June 2021, aims to strengthen anti-money laundering (AML) rules in the EU and place higher responsibility on regulated entities to fight financial crime.
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5th AML Directive
The EU’s 5th Anti-Money Laundering Directive (5AMLD), which took effect on 10 January 2020, is designed to bring more transparency to improve the fight against money laundering and terrorist financing and tightens regulatory controls across more sectors. The scope of the Directive is extended to include virtual currency exchanges, estate agents and rental intermediaries, art dealers, customers who are applying for Citizenship or Residency by Investment, and more.
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4th AML Directive
The EU’s 4th AMLD was designed to strengthen the EU's defences against money laundering and terrorist financing, while also ensuring that the EU framework is aligned with the Financial Action Task Force's (FATF) international anti-money laundering (AML) and counter-terrorist financing (CTF) standards. Key modifications included:
- Emphasis on ultimate beneficial ownership and enhanced customer due diligence
- Expanded definition of a politically exposed person (PEPs) to domestic PEPs
- Cash payment threshold lowered to €10,000 (US$11,250)
- Expanded to include the entire gambling sector beyond just casinos
- Enhanced risk-based approach, requiring evidence-based measures
Solutions
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