On December 15, 2017, the agreement between the EU Parliament, Commission and Council on the amendment of the currently valid 4th Money Laundering Directive took place. The imminent enactment as well as the promulgation of the 5th Money Laundering Directive is to be implemented into national law with a deadline within 18 months (i.e. with an expected publication of the amendment in the Official Journal in June/July 2018 by the end of 2019). The European Parliament’s approval of the 5th Money Laundering Directive took place on 19.04.2018.
Basically, the main aspects of the amended Money Laundering Directive can be divided into two main areas:
What does the 5th Money Laundering Directive retain?
With regard to the scope of application, it is not apparent at the current time that there will be a fundamental and significant expansion of the group of obligated parties. The only significant change is that exchange platforms and providers of electronic purses for virtual currencies will now be treated in the same way as banks and payment service providers. The background to this development is the increasing importance (incl. their tradability) of cryptocurrencies.
With regard to the fundamental structure of relevant compliance requirements, there is also no reason to expect any change in the way the specific obligations set out in Sections 10 et seq. of the German Money Laundering Act (GwG) are fulfilled. GwG are not expected to change.
Likewise, the partially clear demands / plans to reduce the concept of beneficial ownership to a threshold of 10% of the shares could ultimately not be enforced, so that only those who hold at least 25% of the shares in an organization must continue to be reported as beneficial owners.
What will change under the 5th Money Laundering Directive?
The planned amendment to the existing Money Laundering Directive aims in particular to respond to the risks identified in connection with e-money products that can be used anonymously (especially non-reloadable prepaid products, the issuance of which will only be permitted below the threshold of EUR 150 (previously EUR 250)) or online payments with e-money. A further innovation in this regard will be that the acceptance of e-money will only be permitted if it has been issued in a member state or a country with comparable protection standards.
Furthermore, in the future it will be possible to inspect the transparency register in a similar way to the commercial register – i.e. the previous restriction on inspection is expected to be abolished. In addition, it will be mandatory for obligated parties to inspect the register in the future as soon as a business relationship is initiated (mutual control of entries). For the publication of the above-mentioned beneficial owners, it is also planned to create an extended public register.
With regard to the due diligence requirements for business partners from or with a relationship to high-risk countries, the amendment to the directive is expected to be significantly more stringent. In the future, payment recipients will have to intensively question their business partners about their business purpose as well as the purpose of the business relationships (and even individual transactions). The establishment of business relationships with partners from risk-afflicted third countries must be approved by the management in each individual case. These changes thus inevitably lead to a slowdown in the establishment of new business relationships. Consider the increased time required for careful examination and the resulting potential consequences in the event of wrong decisions.
In addition, the amendments to the Money Laundering Directive, which have already been described, are intended to enable FIUs (Financial Intelligence Units) to cooperate more closely and to increasingly exchange their findings. This will be realized through the establishment of a central register.
Sources:
https://www.compliance-manager.net/fachartikel/die-revolution-faellt-aus-730604202