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The EU has announced its
6th Anti-Money Laundering Directive, which is due to come into
effect on 3rd December 2020, and must be enforced by all regulated
financial institutions six months later, by 3rd June 2021. This
follows 5MLD, which was implemented in January 2020.
Enabled by Brexit, the
UK government has chosen to opt out of enforcing compliance with 6MLD, on the
basis that domestic legislation is already up to scratch, and even ‘goes much further’ than what is recommended in the EU’s
Anti-Money Laundering Directives. However, any regulated UK businesses in the
financial sector who operate in Europe must still comply with changes set out
There are several key
updates to be aware of, introduced by 6MLD, which we’ll run through below. Need
more context on 5MLD first? Read more about the 5th Anti-Money
Laundering Directive over on the SmartSearch blog.
the Definition of Money Laundering
6MLD will see a more
specific, harmonised definition of money laundering. This directive has
expanded the list of predicate offences (offences which are part of a larger
crime) to include 22 different crimes, which now directly constitute money
laundering. This list is intended to iron out any existing loopholes in AML
regulations which might enable criminals to avoid penalties and prosecution. This
list includes crimes like self-laundering, cybercrime, aiding and abetting
money laundering and many others.
to Criminal Liability
Until 6MLD, only
singular people could be punished for money laundering, but this new EU money laundering
directive will extend criminal liability to cover any legal persons involved –
like partnerships, companies and more. For example, if a legal person did not
act to prevent illicit proceedings being carried out by someone senior within
an organisation, they could be charged and convicted. This change is intended
to force a greater level of accountability within financial organisations.
Down with Tougher Punishments
This is a further
measure intended to deter financial crime. 6MLD dictates that all member states
must now set the minimum prison sentence for anyone found guilty of money
laundering to four years – where it had previously been just one year. This
latest directive also grants judges in member states increased powers with
regards to money laundering, as they can now prevent organisations from
accessing state funding, and issue fines to individuals.
Involvement of Member States
The EU’s 6thAnti-Money Laundering Directive also encourages collaboration between member
states, in relation to the handling of money laundering offences. For instance,
if a money laundering operation is taking place over two different countries,
both of which are member states, then these two countries should work together
going forward to identify the illegal proceedings, then prosecute and convict
the criminal in question.
If you’re part of a
company which operates in the EU, then you’ll need to be ready for the
introduction of 6MLD in 2021. Ensuring your business is audit-ready at all
times, SmartSearch offers a comprehensive selection of AML services, including KYC checks, adverse media searches, sanctions screenings and more – all accessible via one
convenient platform. Plus, the database we use to carry out these checks
provides both domestic and international coverage, so it’s ideal for businesses
with dealings in Europe.
Our range of intelligent
AML products will guarantee your compliance with the latest AML regulations, and ensure you’re always operating within the guidelines from the FCA
and the FATF, so you can focus on what matters.
What are AML
AML regulations are the
laws and legislation put in place around the world in an attempt to prevent
money laundering from taking place. They may vary across the globe, according
to the financial authorities in each continent or country. In the UK, businesses
are legally obliged to comply with AML regulations set out by the FATF, and
follow guidelines from the FCA.
When is 6MLD taking
The 6thAnti-Money Laundering Directive from the European Union will take effect on 3rdDecember 2020, and must be implemented by all relevant financial institutions 6
months later, by 3rd June 2021.
What is the 5thAnti-Money Laundering Directive?
The 5thAnti-Money Laundering Directive came into effect on January 10th2020, and included several key updates to the pre-existing EU directives. There
were two primary objectives of 5AMLD: to stop the financial systems in member
states being exploited by criminal activities, and increase the transparency
around areas such as cryptocurrency and high value goods, to make it harder for
criminals to conceal illicit transactions.