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EU Cracks Down on Money Laundering with New Regulations

The European Union is taking a major step to combat money laundering and terrorist financing with new regulations that aim to increase transparency and cooperation among member states.

Key Provisions of the Single Regulation

  • Customer due diligence: The regulation sets out provisions for customer due diligence, requiring financial institutions and other businesses subject to anti-money laundering controls to verify the identity of their customers.
  • Beneficial ownership transparency: The regulation requires beneficial owners to be identified and their information to be made available to competent authorities.
  • Anonymous instruments: The regulation includes rules on so-called “golden” passports and visas, as well as the use of anonymous instruments such as crypto-assets.

Strengthening Supervision and Intelligence

  • The Sixth Directive on the fight against money laundering provides national provisions on supervision and financial intelligence units, ensuring that competent authorities have access to necessary and reliable information.
  • A new European Anti-Money Launderling Authority (AMLA) will be established to ensure compliance with anti-money laundering and anti-terrorist financing requirements. The authority will have supervisory and investigative powers.

Improving Oversight

  • France has recently restored access to a register of beneficial owners, which was previously suspended due to concerns over data privacy.
  • Other measures under consideration include improving oversight of professionals involved in the activities of legal entities and real estate sector, as well as increasing staff numbers at financial intelligence units.

Assessment of France’s Anti-Money Laundering Regime

  • France’s anti-money laundering regime has been evaluated by the Financial Action Task Force (FATF) and was found to be robust and sophisticated in many respects.
  • However, there are still areas for improvement, including supervision of professionals and oversight of the not-for-profit sector.

Goals of the New Regulations

  • The EU’s new regulations aim to make the anti-money laundering regime more risk-based and effective, while also reducing the compliance burden on financial institutions and other businesses subject to anti-money laundering controls.

Key Takeaways

  • The EU’s “single regulation” sets out provisions for customer due diligence, beneficial ownership transparency, and the use of anonymous instruments.
  • A new European Anti-Money Launderling Authority (AMLA) will be established to ensure compliance with anti-money laundering and anti-terrorist financing requirements.
  • France has restored access to a register of beneficial owners, but free access without limits remains a concern due to data privacy concerns.
  • The EU’s new regulations aim to improve oversight of professionals involved in the activities of legal entities and real estate sector, as well as increasing staff numbers at financial intelligence units.

Sources

  • European Union
  • French government
  • Financial Action Task Force (FATF)
  • Court of Justice of the EU

Production Editor’s Note: This article has been written by a leading expert in the field and reviewed by ICLG’s in-house editorial team for originality, relevance, and style.