17 May 2022 – Vanessa Galhardo-Galhetas
On 7th May 2020, the European Commission adopted an action plan for a comprehensive Union Policy on preventing money laundering and terrorism financing. In follow-up of this ambitious action plan, the European Commission proposed a so-called “AML Package” on 20th July 2021. The AML Package consists of four legislative proposals: (1) a Regulation establishing a new EU AML/CFT Authority (“AMLA”), (2) a Regulation on AML/CFT (“AMLR”), (3) a 6th AML/CFT Directive (“AMLD6”), and (4) a revision of the 2015 Regulation on transfers of funds, to include crypto assets. With its Action Plan and AML Package, the European Commission aims at improving the EU’s overall fight against money laundering and terrorist financing, as well as strengthening the EU’s global role in this area.
On 15th of March 2022, a Draft Report on the proposal for a Regulation of the European Parliament and of the Council on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing, was published by the European Parliament.
Scope of obliged entities
The definition of obliged entities was made broader by the European Parliament in its Draft Report. Wealth managers, asset managers, lawyers, but also high level professional football clubs and sport agents were added to the definition.
Obligation of professional secrecy
The proposal of the European Commission confirms the legal privilege and states that legal advice should remain subject to professional secrecy, however an exception is introduced for the situation where the legal professional is taking part in money laundering or terrorist financing or where the legal professional knows that the client is seeking legal advice for the purpose of money laundering or terrorist financing. The European Parliament proposes to maintain the professional secrecy of legal advice, except in the circumstance laid down in the Regulation.
Threshold for large payments
The European Commission proposed a Union-wide limit to large cash transactions above 10.000 EUR. In exchange the European Commission upheld that persons trading in goods would no longer be subject to AML/CFT obligations.
The European Parliament proposes to further limit large cash transactions above 5000 EUR.
Customer due diligence
The Draft report suggests to limit the exemption for notaries, lawyers and other independent legal professional, auditors, external accountants and tax advisors to comply with the requirements on customer due diligence.
The European Parliament stated that shell banks and non-compliant crypto-asset service providers have a high risk for money laundering and terrorism financing, in order to facilitate compliance, it was proposed that AMLA establishes and maintains a non-exhaustive public register with names of entities identified as shell banks and non-compliant crypto-asset service providers.
The threshold that serves as an indication of ownership of a legal entity, was reduced in the Draft report from 25% to 5%.
The final version of the report of the European Parliament is to be voted on 11th July 2022 in the concerned committees. It is expected that the Report will be presented for a vote in the July/September 2022 plenary of the European Parliament.
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