The EU's new anti-money laundering package: Overview and impact

Good morning.The 28th Shirahama Symposium on CybercrimeThis is Sakimura heading towards.

In the first and second parts of this series, we looked at the documents that formed the background to this amendment, but this time we will finally get to the real legal amendments.

Overview

On June 2024, 6, the EU published in the Official Journal of the EU the "AML Package", which consists of the following:

• Regulation (EU) 2024/1620 establishing the Anti-Money Laundering and Counter-Terrorist Financing Authority (AMLA)¹(AMLAR).
  • Establishment of a new European Anti-Money Laundering and Countering the Financing of Terrorism Authority (AMLA), based in Frankfurt. The regulation will come into force seven days after publication and will apply from 7 July 2025.
• Regulation (EU) 2024/1624 on preventing the use of the financial system for money laundering or terrorist financing (AMLR)²
  • New regulations to harmonise AML rules across the EU and close loopholes for fraudsters. The regulations will come into force 21 days after publication and will apply from 2027 July 7 (except for some transactions involving football agents and professional football clubs, which will apply from 10 July 2029).
• Directive (EU) 2024/1640 on the mechanisms that Member States should implement to prevent the use of the financial system for money laundering or terrorist financing (AMLD 6)³
  • This Directive amends Directive (EU) 2019/1937 and amends and repeals Directive (EU) 2015/849. It improves the organisation of national AML systems and cooperation between Financial Intelligence Units (FIUs) and supervisory authorities. The Directive will enter into force 21 days after publication. Member States have until 2025 July 7 to transpose the Directive into national law.

These requirements will be implemented in a phased manner, allowing us to adjust our internal procedures to the new regulatory environment.

Anti-Money Laundering and Terrorist Financing Agency (AMLA)

• AMLA is headquartered in Frankfurt, Germany and has the following functions:
  • Carrying out regular assessments of credit and financial institutions operating in at least six Member States and directly or indirectly supervising high-risk entities
  • Has the power to issue binding decisions and impose administrative and financial penalties for non-compliance
  • Coordinating the approach of national supervisory authorities and issuing guidelines

Rules to prevent the use of the financial system for money laundering or terrorist financing(AMLR)

AMLR introduces:

• New obligations apply to entities including the cryptocurrency sector, luxury goods traders and football clubs⁴Expanded application of AML rules to
• Imposes stricter due diligence requirements, restricts beneficial ownership and limits cash payments to €1. Gives the AMLA direct and indirect supervisory powers over high-risk subject entities in the financial sector.
• Empowering the AMLA to impose sanctions for serious, systematic or repeated violations of AML requirements

It also introduces new obligations for obligated entities and Member States, such as:

• Regular employee evaluations
• Group-wide AML and CFT measures
• New rules for outsourcing contracts
• Regulating due diligence and KYC procedures
• Countermeasures against high-risk third countries
• Prohibitions and special obligations (e.g. correspondent relationships with shell institutions)
• Information exchange framework
• Document Retention Period
• Financial Intelligence Unit (FIU)⁵In cooperation with
• Suspension of transactions suspected to involve criminal proceeds or financing

Directive on the mechanisms that Member States should implement to prevent the use of the financial system for money laundering or terrorist financing(AMLD 6)

AMLD 6 expands the scope of obligations of Member States in the implementation of legal solutions to combat money laundering and terrorist financing. Specifically,

• It requires member states to make the central bank account register information on which banks each person holds an account with available through a single access point.
• Ensuring that national law enforcement agencies have access to these registries through this single access point
• Harmonization of bank statement formats to help fight crime and track proceeds
• Authorizing member states to extend AML rules to certain high-risk business sectors
• Requires member states to regulate golden visa and golden passport issues and maintain a single central account register

The AMLA will also issue regulatory technical standards regarding sanctions for AML and CFT violations.

Expected market impact

The EU's Anti-Money Laundering Regulation (AMLR), Anti-Money Laundering Authority (AMLA) and the Sixth Anti-Money Laundering Directive (AMLD 6) are expected to have a significant impact on the market by introducing stricter regulatory and monitoring mechanisms. The main expected impacts are as follows:

Harmonization and Standardization

• Single rulebook: The AMLR will establish a single set of rules that are directly applicable across EU member states, replacing the previous directive-based approach requiring national legislation, resulting in more uniform compliance standards and less regulatory fragmentation.
• Expanded scope of application: The AMLR will extend its scope to sectors such as crypto asset service providers, luxury goods traders and professional football clubs, increasing the number of entities subject to AML regulation.

Increased compliance requirements

• Customer Due Diligence: Stricter customer due diligence (CDD) requirements will come into force, including beneficial ownership transparency and enhanced due diligence for high-risk transactions and customers.
• Internal Policies and Management: Subject entities will need to implement robust internal policies, controls and procedures to comply with the new AML standards, which may involve significant operational changes and increased compliance costs.

Operational and Financial Impact

• Increasing compliance costs: Firms will face higher compliance costs as additional resources, staff training and technology investments will be required to meet new AML requirements.
• Technical adaptation: The need for advanced technological solutions for transaction monitoring and compliance management is likely to spur innovation and encourage consolidation in the AML compliance tools market.

Changes in supervision and enforcement

• Intensive Supervision: The establishment of the AMLA will centralise supervision and enforcement, strengthen coordination between national authorities and ensure consistent application of AML rules across the EU.
• Direct Supervision: The AMLA would directly oversee certain high-risk financial institutions, leading to greater scrutiny and potentially higher fines.

Market Dynamics and Competition

• Competitive environment: The new regulations will create a level playing field by holding all market participants to the same high standards, which is likely to lead to increased competition among compliant operators.
• Impact on financial services: Financial institutions will need to update their AML/CFT risk assessments and adapt their processes, which could impact operational efficiency and customer relationships.

Long-term benefits

• Improving market integrity: By reducing the risks of money laundering and terrorist financing, the new AML framework has the potential to enhance the soundness and stability of the EU financial system and promote investor confidence and economic stability.
• Global influence: The EU's tough AML measures could set a precedent for other jurisdictions and lead to stronger AML/CFT standards globally.

In summary, although the implementation of the EU AMLR, AMLA and AMLD 6 will involve significant compliance efforts and costs for firms, it is expected to result in a stronger and more harmonised regulatory environment that will enhance the soundness of the EU financial system.

1. マネーロンダリング及びテロ資金供与対策機関（AMLA）を設立し、EU規則No. 1093/2010、1094/2010、1095/2010を改正する2024年5月31日付の欧州議会及び理事会規則（EU）2024/1620
2. Regulation (EU) 2024/5 of the European Parliament and of the Council of 31 May 2024 to prevent the use of the financial system for the purposes of money laundering or terrorist financing (AMLR).
3. Directive (EU) 2024/5 of the European Parliament and of the Council of 31 May 2024 on the mechanisms that Member States should implement to prevent the use of the financial system for the purposes of money laundering or terrorist financing.
4. Obliged institutions: Any entity that is required to comply with Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulations. This includes credit institutions, financial institutions and other entities that are regularly assessed to ensure their compliance with AML and CFT standards.
5. Financial Intelligence Unit