Luxembourg Takes a Risk-Based Approach to Anti-Money Laundering Reforms
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The European Parliament and Council have published a new directive aimed at strengthening EU rules on anti-money laundering (AML) and combating terrorist financing. The 4th Anti-Money Laundering Directive (AMLD) introduces a risk-based approach to AML, increased transparency in the identification of beneficial owners, and expanded scope.
Key Requirements
- Focus on risk assessment and corresponding risk-based approach
- Supra national and national risk assessments
- Increased transparency in the identification of beneficial owners
- Tax crimes now within predicate offenses
- Larger scope
- Customer due diligence waiver for certain e-money products
- Third country policy
The directive introduces explicit lists of risk factors to be taken into consideration by obliged entities when performing their internal risk assessment. Guidelines are expected from European Supervisory Authorities by June 2017.
Obliged Entities
The directive applies to all “obliged entities” defined as:
- Credit institutions
- Financial institutions
- Auditors
- External accountants
- Tax advisors
- Notaries
- Trusts or company service providers
- Estate agents
- Traders in goods making or receiving payments above EUR 10,000
- Providers of gambling services
National Central Registers
National central registers will hold information on the beneficial owners of all corporate and other legal entities incorporated within their territory. The Commercial register is quoted as an example of such register.
Predicate Offenses
Tax crimes relating to direct and indirect taxes are now considered predicate offenses.
Expanded Scope
The directive widens the scope of obliged entities, including:
- Gambling services
- Traders in goods with a lower cash transaction threshold
- Politically exposed persons
Customer Due Diligence Waiver
The directive provides for customer due diligence waiver for certain e-money products, subject to risk-mitigation conditions.
Third Country Policy
The directive establishes a common approach towards non-EU countries with deficient anti-money laundering and counter-terrorism financing regimes.
Implementation Timeline
Implementation of the directive is expected by June 2017, with a two-year period for member states to transpose it into national legislation. The Commission has published a proposal to amend the directive, which would move the transposition date forward to January 2017.
Our Services
Our team can help you understand and implement the directive through modular services including:
- Informational workshops
- Diagnosis
- Implementation
- Onsite support