Banks Must Implement Stricter Measures to Combat Money Laundering

In a move to strengthen anti-money laundering (AML) regulations, banks operating in the European Union have been directed to adopt more stringent measures to prevent financial transactions from being linked to illegal activities.

New Guidelines for Banks

The new guidelines require banks to demonstrate that they have equivalent identification and due diligence measures in place for payment accounts opened by customers with financial institutions or other authorized entities. This includes considering a list of third-country jurisdictions deemed to pose a threat to the global financial system due to strategic deficiencies in their anti-money laundering and counter-terrorism financing legal frameworks.

Enhanced Procedures for CSO Clients

For clients classified as “other” (CSO), banks are expected to follow enhanced procedures, including:

• Obtaining additional information about clients, representatives, or effective beneficiaries
• Obtaining approval from senior management before establishing new correspondent relationships
• Reducing the time period for updating client information and data received during due diligence exercises
• Intensifying monitoring procedures related to business relationships or specific transactions

Reporting Requirements

Banks are required to report suspicious transactions linked to money laundering or other crimes to relevant authorities, such as:

• The Central Bureau of Investigation and Criminal Action (DCIAP)
• The Financial Information Unit in Portugal

The reporting duty includes identifying the person involved in the suspicious transaction, providing known information about their activities, and sharing all investigation and evaluation details with authorities.

Privacy Protection

Banks are bound by a duty of secrecy and discretion, requiring them to maintain confidentiality of customer information. However, exceptions apply, including:

• Disclosure with client consent
• Reporting to regulatory bodies
• Compliance with judicial proceedings or parliamentary inquiries

Sanctions on Russian Banks

The European Union has also imposed new sanctions on Russian banks, prohibiting EU banks from accepting deposits equivalent to more than EUR 100,000 from Russian citizens or legal entities established in Russia.

In summary, the European Union’s directive aims to strengthen anti-money laundering regulations by requiring banks to adopt stricter measures to prevent financial transactions from being linked to illegal activities. Banks must implement enhanced procedures for CSO clients, report suspicious transactions, and maintain confidentiality of customer information while complying with regulatory requirements.