On 30 May 2024, the Council of the European Union adopted the new anti-money laundering and countering the financing of terrorism (AML/CFT) legislative package. This initiative aims to comprehensively strengthen the EU’s ability to combat money laundering and terrorist financing.

The new Anti-Money Laundering Regulation and the new Anti-Money Laundering Directive

The most important change will be the introduction of an anti-money laundering regulation that will apply directly in all Member States, from mid-2027. This will mean that most of the provisions within the Romanian law No.129/2019 on the prevention and combating of money laundering and terrorism financing, as amended from time to time, will be replaced by this regulation.

Another significant piece of legislation is the new anti-money laundering directive which focuses on the responsibilities of the Financial Intelligence Units (FIUs) and the improvement of cooperation between regulatory authorities.

Background

The European Commission published the AML/CFT reform package proposals on 20 July 2021.

Four key pieces of legislation

This legislative package consists of four key pieces of legislation:

1. Regulation establishing a new EU-level anti-money laundering authority:

• A new EU-level anti-money laundering authority (AMLA) will be established in Frankfurt, Germany to supervise the new rules on combatting money laundering. The AMLA will operate as a central coordinating body, providing overarching authority and jurisdiction across the European Union. This represents a departure from localized supervision, fostering a unified approach to AML/CFT supervision and amplifying the fight against money laundering and terrorist financing.

• The AMLA will directly supervise high-risk financial institutions, including crypto-asset service providers operating in at least six member states or requiring immediate action to address imminent risks.

• The AMLA will coordinate national supervisors for other financial entities and non-financial entities, support cooperation among national FIUs, and supervise the implementation of targeted financial sanctions.

• The AMLA is expected to start its operations in mid-2025 and will begin direct supervision after the new EU AML/CFT framework applies.

2. Regulation on the prevention of the use of the financial system for money laundering or terrorist financing (AML Regulation):

• The AML Regulation, as the EU’s “single rulebook,” aims to standardize anti-money laundering measures despite varying national approaches. It emphasizes unified supervision, requiring supervisors and legal experts to adapt to EU-level standards, potentially leading to significant changes for affected entities.

• This piece of legislation extends the list of obliged entities to include the entire crypto sector, requiring customer due diligence for transactions of EUR 1,000 or more and prohibiting anonymous crypto-asset wallets.

• The AML Regulation introduces an EU-wide limit of EUR 10,000 on cash payments, with member states having the option to set lower limits. It includes detailed rules on beneficial ownership and mandates enhanced due diligence for high-risk third countries and ultra-rich individuals (with a total wealth of at least EUR 50,000,000).

3. The sixth AML Directive on the mechanisms to be put in place by the Member States for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, repealing Directive (EU) 2015/849 (hereinafter AMLD6):

• AMLD6 strengthens requirements for beneficial ownership registers, ensuring that those with a legitimate interest, including journalists and civil society organizations, have immediate, unfiltered, and free access to beneficial ownership information held in national registries.

• It enhances the powers of FIUs to analyse and detect money laundering and terrorist financing, as well as to suspend suspicious transactions.

4. Revision of Regulation 2015/847/EU on Information Accompanying Transfers of Funds (TFR):

• The TFR extends current provisions on money transfers to include crypto-asset transfers by crypto-asset providers, enabling the tracking of crypto-asset transfers.

• By ensuring that information on the payer and payee accompanies transfers of crypto-assets, this piece of legislation aims to mitigate the risks of financial crimes within the crypto sector. This revision aligns the rules for crypto-asset transfers with those applicable to traditional bank transfers. Enhanced monitoring and reporting requirements are expected to facilitate better detection and prevention of illicit activities, reinforcing the overall integrity of the financial system.

Further Considerations

Together, AML Regulation and AMLD6 will supersede AMLD4. These new regulations include widened access to beneficial ownership information, standardized content within beneficial owner registers, and enhanced powers for FIUs.

Additionally, the AML Regulation addresses the implementation of stricter regulations specifically targeting football clubs, reflecting the global industry’s vulnerability to financial crimes. From 2029, top-tier professional football clubs involved in significant financial transactions will need to verify customer identities, monitor transactions, and report any suspicious activity.

To detect money laundering schemes and freeze assets in time, national FIUs and other competent authorities will be able to access information on beneficial ownership (BO) held by so-called obliged entities (e.g. banks, assets and crypto assets managers or real and virtual estate agents). The information on beneficial owners of certain foreign legal entities will also be in the BO registers. This provision applies retroactively up to 10 years back for real estate.

When will the new AML measures come into force?

The publication in the Official Journal of the European Union is scheduled shortly (summer 2024), with its entry into force 20 days later. Following this:

• The AMLA is anticipated to commence operations in Frankfurt in July 2025.

• The AML Rrgulation will come into effect by mid-2027.

• Member states are required to transpose the provisions about beneficial ownership registries outlined in AMLD6 by mid-2026.

• Member states are required to transpose the remaining provisions of AMLD6 by mid-2027.

Get in Touch

We hope this article will be useful for organisations looking to learn more about how to comply with the new AML/CFT legislative package.

Diana Stetiu, Attorney-at-Law and Managing Partner at Diana Stetiu FinTech Law Office