On 5 February 2013 the European Commission adopted two new proposals in the fight against money laundering, tax evasion and terrorist financing. One of these proposals was a directive on the prevention and use of the financial system for the purpose of money laundering and terrorist financing – the Fourth AML Directive.
This Fourth AML Directive was proposed to incorporate recommendations put forward by the Financial Action Task Force (FATF) in February 2012 following a review of the Third AML Directive. The FATF is an inter-governmental body established with the objective of setting standards and promoting effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. Essentially the new Directive aims to improve the clarity and consistency of the rules across the Member States.
What Has Changed Since The 3rd Directive?
In a press release dated 5 February 2013, the European Commission indicated that the Fourth AML Directive provides for a more targeted and focused risk-based approach. Designated persons must conduct documented risk assessments and these assessments must be current and up-to-date.
Customer Due Diligence
Simplified due diligence provisions are not expressly included in the Fourth AML Directive. However, designated persons may apply the simplified measures provided that this application can be justified using the risk-based approach.
The definition of a Politically Exposed Person (PEP) will be expanded to include domestic PEPs, i.e. those resident in EU Member States in addition to ‘foreign’ PEPs, for example, heads of states, members of governments, members of parliament, judges of supreme courts.
All bodies corporate, legal entities and trustees are to hold adequate, accurate and up-to-date information on beneficial owners. Revised clarification is given as to how these individuals can be identified.
The new Directive covers the gambling sector whereas previously only casinos were obliged to adhere to these regulations.
The European Commission further advised that it is an aim of the Directive to strengthen cooperation between the different national Financial Intelligence Units (FIUs) whose tasks are to receive, analyse and disseminate information and reports about suspicions of money laundering and terrorist financing.
What Happens Next?
Once finalised and adopted at European level, the Directive must then be transposed into national law by the individual member states within a period of two years. In Ireland, the Criminal Justice (Money Laundering & Terrorist Financing (Amendment) Bill 2013 was published by the Department of Finance on 31 January 2013. However it is expected that the Bill will undergo various revisions as it progresses through the legislative process.