Anti-money laundering: Council agrees its position on a strengthened rulebook

Money laundering: In order to enlarge the scope of the existing regulatory framework and to close possible loopholes, today (7 December 2022) the Council agreed its position on an anti-money laundering (AML) regulation and a new directive (AMLD6).

Together with the proposal for a recast of the transfer of funds regulation, on which an agreement has already been reached with the European Parliament, these will form the new EU AML rulebook once adopted.

Crypto sector

The new EU anti-money laundering and combating the financing of terrorism (AML/CFT) rules will be extended to the entire crypto sector, obliging all crypto-asset service providers (CASPs) to conduct due diligence on their customers.

This means that they will have to verify facts and information about their customers. In its position, the Council demands CASPs to apply customer due diligence measures when carrying out transactions amounting to €1000 or more, and adds measures to mitigate risks in relation to transactions with self-hosted wallets.

The Council also introduced specific enhanced due diligence measures for cross-border correspondent relationships for crypto-asset service providers.

Third-party financing intermediaries, persons trading in precious metals, precious stones and cultural goods, will also be subject to the obligations of the regulation, as will jewellers, horologists and goldsmiths.

By limiting large cash payments, the EU will make it harder for criminals to launder dirty money. An EU-wide maximum limit of €10.000 is set for cash payments. Member states will have the flexibility to impose a lower maximum limit if they wish.

Fighting money laundering

Third countries that are listed by the Financial Action Task Force (FATF, the international standard setter in anti-money laundering) will also be listed by the EU.

There will accordingly be two EU lists, a “black list” and a “grey list”, reflecting the FATF listings. The Commission will not be required to redo the identification process performed by the FATF. This is to ensure that FATF lists are transcribed in a timely manner and to avoid wasting resources. Once a third country appears on one of these lists, the EU will apply measures proportionate to the risks posed by the country.

In its position, the Council decided to make beneficial ownership rules more transparent and to harmonise them more. In particular, the Council clarifies that beneficial ownership is based on two components – ownership and control – which need to be analysed in order to assess how control is exercised over a legal entity, and to identify all natural persons who are the beneficial owners of that legal entity. Related rules applicable to multi-layered ownership and control structures are also clarified. The Council also spells out further how to identify and verify the identity of beneficial owners across types of entities, including non-EU entities. Data protection and record retention provisions are also clarified. This is expected to make the work of the competent authorities easier and faster.

Member states should ensure that any natural or legal person that can demonstrate a legitimate interest has access to information held in the beneficial ownership registers, and such persons should include those journalists and civil society organisations that are connected with the prevention and combating of money laundering and terrorist financing.

The package also foresees i.a. the clarification of outsourcing provisions, the clarification of the powers of supervisors, a minimum set of information to which all financial intelligence units (national centres for the receipt and analysis of suspicious transaction reports and relevant money laundering information) should have access, as well as improved cooperation among authorities.