5th Anti-Money Laundering Directive (5AMLD) - Key things you need to know

Implementation date

10 January 2020.

New entities coming under 5AMLD

• Virtual currency providers and custodian wallet providers
• Art traders (over EUR10,000 for one or a series of linked transactions)
• Providers of similar services to auditors, external accountants and tax advisors as a principal business or professional activity
• Estate agents acting as intermediaries in the letting of property where the monthly rent is equivalent to EUR10,000 or more

Politically exposed persons (PEPs)

A register of the exact functions which qualify as prominent public functions is maintained by member states.

Beneficial Ownership

5AMLD goes further than 4AMLD by allowing public access to records of Registers of Beneficial Ownership.

Trusts are required to meet greater transparency obligations, including the beneficial ownership requirements.

Client due diligence

Identification and verification of customers must be based on documents, data or information from a reliable and independent source, and where available should include approved electronic identification means.

Virtual currencies

Under 5AMLD virtual currencies will have a legal definition.

Prepaid cards

5AMLD lowers the requirement for customer verification from €250 to €150 and to €50 for some remote transactions.

Enhanced due diligence

5AMLD requires enhanced due diligence when dealing with transactions involving high-risk countries. As well as obtaining evidence of the source of funds and source of wealth, information on beneficial ownership and background to the intended transaction must also be recorded. Nations deemed to be high-risk because of their lack of effective anti-money regulations and due diligence requirements are placed on an EU list of states that require more intensive checks when money is moved from them into the EU. There is an obligation on regulated businesses to view this list and ensure that their due diligence procedures reflect the risk posed by financial movements from such countries.

Information sharing

Financial Intelligence Units (FIUs) have the ability to acquire any information they need from any regulated entity, even without a previous suspicious transaction report being made.

How you can prepare for 5AMLD:

• Consider how your risk appetite for working with new 5AMLD entities may be affected.
• Consider how you may want to use PEP list.
• Ensure PEP lists are kept up to date (internal or provided by a third party).
• Assess the criteria for deciding on the acceptability of electronic CDD sources.
• Consider updating your policies and procedures on the applicable of data privacy laws as well as the new processes of providing information to Financial Intelligence Units (FIUs).
• Consider whether your policies, procedures and processes need to be updated to ensure they meet the due diligence requirements for high risk third countries.
• Consider whether the controls in place to collate, store and manage information internally are sufficient to enable data to be retrieved and provided to FIUs in a timely manner.

How we can help with 5AMLD:

• AML training - our anti-money laundering refresher for law firms training course is now available and covers everything you need to know about 5AMLD
• Helpline advice
• Risk and compliance system to record AML reports/audits against the regulations
• Policy library (AML policies will be updated once the Legal Sector Guidance has been re-published)

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Please contact us for more information or to discuss your requirements.