EU member states endorsed Brussels' revised AML plan on Wednesday, supporting Commissioner Mairead McGuinness.
It is noteworthy that the 27 Member States have decided to switch from their independent blacklist of nations to the FATF watchlist. The EU watchlist categories, in the opinion of Brussels officials, posed a greater risk of financial crime.
Member States of the European Council reached consensus on their stances on the new directive and the AML regulation (AMLD6) during a meeting. The new AML Authority will be established as a result of the regulation, which also forbids cash transactions worth more than €10,000.
They also concurred that the rule will include jewelers and encompass cryptocurrency transactions worth more than €1,000.
In addition, ministers announced that they would adopt the FATF's "black" and "grey" watchlist categories.
One of the most contentious aspects, the cash transaction component, had so far been resisted by nations like Germany and Austria.
The EU will make it more difficult for criminals to launder money by restricting large cash payments, according to the Council. Cash payments are restricted to a maximum of €10,000 across the entire EU. The freedom to set a lower maximum limit will be up to the Member States.
"Large cash payments beyond €10,000 will become impossible," according to Zbynk Stanjura, the current chairman of the Council's financial ministers. "Trying to stay anonymous when buying or selling crypto-assets will become much more difficult."
"Hiding behind multiple layers of ownership of companies won’t work any more. It will even become difficult to launder dirty money via jewellers or goldsmiths ," said Czech representative Stanjura, whose country currently holds the Council's revolving six-month presidency.
The European Council stated in a statement: "Together with the proposal for a recast of the transfer of funds regulation, on which an agreement has already been reached with the European Parliament, these will form the new EU AML rulebook once adopted."
The AML package would be expanded to the whole crypto industry, requiring all crypto-asset service providers (CASPs) to perform due diligence on their clients, Member States also agreed.
"The Council demands CASPs to apply customer due diligence measures when carrying out transactions amounting to €1,000 or more, and adds measures to mitigate risks in relation to transactions with self-hosted wallets."
"The Council also introduced specific enhanced due diligence measures for cross-border correspondent relationships for crypto-asset service providers."
According to the European Council, "this means that they will have to verify facts and information about their customers."
The rule will also apply to third-party financing intermediaries, such as:
- individuals who deal in precious metals,
- valuable stones and artistic creations
- horologists and
Additionally, it has been decided that the EU will list any third-party nations that are included on the Financial Action Task Force's (FATF) list, which is the organization that sets international standards for combating money laundering.
As a result, two EU lists—a "black list" and a "grey list"—that correspond to the FATF listings will exist.
"The Commission will not be required to redo the identification process performed by the FATF. This is to ensure that FATF lists are transcribed in a timely manner and to avoid wasting resources. Once a third country appears on one of these lists, the EU will apply measures proportionate to the risks posed by the country ," according to the Council.
According to its position, the Council agreed to increase their transparency and harmonization of the beneficial ownership rules.
It said: "In particular, the Council clarifies that beneficial ownership is based on two components – ownership and control – which need to be analysed in order to assess how control is exercised over a legal entity, and to identify all natural persons who are the beneficial owners of that legal entity."
"Related rules applicable to multi-layered ownership and control structures are also clarified. The Council also spells out further how to identify and verify the identity of beneficial owners across types of entities, including non-EU entities. Data protection and record retention provisions are also clarified. This is expected to make the work of the competent authorities easier and faster," the Council stated.
The information contained in the beneficial ownership registers must be accessible to any natural or legal person who can show a legitimate interest in doing so. This group should include journalists and civil society organizations involved in the investigation and prosecution of money laundering and the financing of terrorism.
The package includes i.a. a minimum set of data that all financial intelligence units (national centers for the receipt and analysis of suspicious transaction reports and pertinent money laundering information) should have access to, the clarification of outsourcing provisions, the clarification of supervisory powers, and improved interagency cooperation.
"Terrorists and those who finance them are not welcome in Europe. In order to launder dirty money, criminal individuals and organisations had to look for loopholes in our existing rules which are already quite strict. But our intention is to close these loopholes further, and to apply even stricter rules in all EU member states," the current chair of the European Council's finance ministers.
By fLEXI tEAM