The legislative passage has been drafted so that all rules applying to the private sector are included in the new regulation. The Directive itself will deal only with the organisation of institutional anti-money laundering (AML) systems at national level in the EU Member States. This structure means that the private sector rules will become law in Member States as soon as the regulation is formally adopted without having to be transposed into national legislation first.
The regulation significantly expands the universe of ‘obliged entities’ that are regulated for AML purposes. All crypto-asset service providers will be in scope and will have to conduct due diligence on their customers when carrying out transactions above EUR1,000. Specific enhanced due-diligence measures are being imposed on crypto-asset service providers that have cross-border correspondent relationships.
Traders of luxury goods such as jewellery, yachts and high-value cars will also become subject to AML regulation. A three-year transition period will be allowed before these classes of business are brought under the regime.
Financial institutions will have to undertake enhanced due-diligence measures when business relationships with high-net-worth individuals involve the handling of a large amount of assets. Failure to do so will be considered an aggravating factor in the sanctioning regime.
An EU-wide maximum limit of EUR10,000 will be set for cash payments. Regulated firms will have to identify and verify the identity of a person who carries out an occasional transaction in cash between EUR3,000 and EUR10,000.
The agreement also alters the rules on beneficial ownership, clarifying that it is based on the two components of ownership and control. Both need to be analysed to identify all the beneficial owners of that legal entity or across types of entities. This will include non-EU entities when they do business or purchase real estate in the EU. The agreement sets the beneficial ownership threshold at 25 per cent. National central registers of beneficial information will have to verify the information submitted to them and will have to flag entities or arrangements associated with persons or entities subject to targeted financial sanctions. Members of the public with ‘legitimate interest’, including press and civil societies, will be allowed access to the registers.
Related rules applicable to multi-layered ownership and control structures are also clarified, to make it more difficult to hide ownership behind multiple layers of ownership of companies. This section of the regulation resembles some of the content of the proposed unshell directive.
The agreement provides for the registration of the beneficial ownership of all foreign entities that own real estate with retroactivity to 1 January 2014.
Regulated entities will also be required to apply enhanced due-diligence measures to occasional transactions and business relationships involving high-risk third countries designated by the European Commission as a threat to the integrity of the EU’s internal market. This assessment will be based on the Financial Action Task Force (FATF) listings and may also be accompanied by EU or national countermeasures.
The agreement must now be formally adopted by the EU council and EU parliament before it can come into force.