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EU negotiators have provisionally agreed on the anti-money laundering regulation (AMLR), after tightening up rules regarding crypto-assets. However, decisions on the location of the Anti-Money Laundering Authority (AMLA) remain unresolved.
Representatives from the Council of the European Union and European Parliament have reached a provisional agreement on parts of the anti-money laundering package.
The agreement has been welcomed by various stakeholders, including the Parliament’s co-rapporteur, Eero Heinäluoma.
“It is a good day for EU citizens and businesses, but bad day for oligarchs and terrorists,” he said a statement to the media.
Heinäluoma, who sits with the centre-left Socialist and Democrats faction in Parliament, continued that this is “a really necessary and long-awaited reform, considering all the scandals over recent years”.
In particular, he noted cases involving Danske Bank and Credit Suisse, as well as the Cyprus Confidential investigation, involving sanctions evasion.
“This agreement is part and parcel of the EU’s new anti-money laundering system,” said Vincent Van Peteghem, Belgium’s minister for finance.
The deal is one of the first victories for the Belgian presidency, which began at the start of this month.
“It will improve the way national systems against money laundering and terrorist financing are organised and work together,” commented Van Peteghem. “This will ensure that fraudsters, organised crime and terrorists will have no space left for legitimising their proceeds through the financial system.”
Among the new rules being introduced is tougher oversight of third-country relationships.
Firms in scope will now be required to apply enhanced due diligence measures to occasional transactions and business relationships involving high-risk third countries.
New rules for crypto
With the new package, all rules applying to the private sector will be transferred to a new regulation.
Meanwhile, the latest AML directive will deal with the organisation of institutional anti-money laundering/counter-terrorism financing (AML/CTF) systems at national level in the member states.
The provisional agreement on an AMLR will, for the first time, exhaustively harmonise rules throughout the EU, closing possible loopholes used by criminals to launder illicit proceeds or finance terrorist activities through the financial system.
The AMLR has long been desired by EU legislators and AML experts due to the scandals that have taken place in the trading bloc in recent years, such as that of Danske Bank and the shuttering of ABLV in Latvia, which have exposed the weaknesses in the EU’s current framework.
Among rules laid out in the provisional agreement is an updated list of obliged entities to new bodies.
The new rules will cover most of the crypto sector, forcing all crypto-asset service providers (CASPs) to conduct due diligence on their customers.
This means that firms will have to verify facts and information about their customers, as well as report suspicious activity.
According to the agreement, CASPs will need to apply customer due diligence measures when carrying out transactions amounting to €1,000 or more.
Further, it adds measures to mitigate risks in relation to transactions with self-hosted wallets.
Representatives on the Council and in the Parliament also introduced specific enhanced due diligence measures for cross-border correspondent relationships for crypto-asset service providers.
An agreement was also reached that credit and financial institutions will need to undertake enhanced due diligence measures when business relationships with high net-worth individuals involve the handling of a large amount of assets.
The failure to do so will be considered an aggravating factor in the sanctioning regime, the agreement suggests.
Cash limits make final text
Cash was also a theme in the new agreement, as representatives opted to introduce an EU-wide maximum limit of €10,000 for cash payments, which will make it harder for criminals to launder dirty money.
Member states will have the flexibility to impose a lower maximum limit if they wish.
In addition, according to the provisional agreement, obliged entities will need to identify and verify the identity of a person who carries out an occasional transaction in cash of between €3,000 and €10,000.
Next steps
"It is time to bid farewell to an era where the EU inadvertently served as a haven for the unscrupulous seeking shelter for their ill-gotten gains," said Paul Tang, a Dutch MEP. "A more European approach is needed. This agreement is part of that."
The legislative files will now be finalised and presented to member states’ representatives in the committee of permanent representatives and the European Parliament for approval.
If approved, the Council and the Parliament will have to formally adopt the texts before they are published in the EU’s Official Journal and enter into force 20 days after publication.
The EU’s negotiators also need to finalise their work on the AMLA framework. Currently, a provisional agreement on the EU’s planned AML agency’s oversight has been reached. However, the city to host the agency has yet to be established. Candidates include Frankfurt, Paris and Vilnius.
