Anti-money laundering and countering the financing of terrorism

AML/CFT: On 20 July 2021, the European Commission presented an ambitious package of legislative proposals to strengthen the EU's regime on anti-money laundering and countering the financing of terrorism.  

The AML/CFT package entails, amongst others, the establishment of an EU AML/CFT Authority (the Authority) which will enhance cooperation among financial intelligence units (FIUs) and coordinate national authorities to ensure a correct and  consistent application of EU rules. The Authority will not replace national supervisors except as a supervisor of a small number of cross-border financial sector entities in the highest risk category.

The AML/CFT package also creates a single EU rulebook, i.e. a unified AML/CFT regulatory framework which includes directly applicable AML/CFT rules and requirements throughout the EU. These rules will be more detailed and granular, notably in the area of customer due diligence and the identification of beneficial owners.

Accordingly, cross-border entities subject to the AML/CFT rules which fall under the direct supervision of the Authority will have a single supervisor, which should simplify their compliance. Cross-border entities that do not fall under the direct supervision of the Authority should still benefit from more harmonised rules with less divergence among different national regimes.

There will be a new Directive on AML/CFT for matters that still require national transposition, such as rules concerning national supervisors and FIUs in Member States.  Also, the scope of the 2015 Regulation on Transfer of Funds will be extended to the transfer of crypto-assets.  Crypto-asset service providers will therefore have to include full information about the sender and the beneficiary of crypto-asset transfers, like payment service providers do for wire transfers.

The Authority is intended to be established in 2023 and start most of its activities in 2024. Direct supervision of certain high-risk financial entities is expected to commence in 2026, once the harmonised rulebook has been completed and applies.

More details can be found here.