Page published 1 May 2024
Introduction
Click to access the webpage of the European Commission on anti-money laundering and counter terrorist financing.
The EU has developed a solid regulatory framework for preventing and combatting money laundering and terrorist financing, substantiated by case law of the EU Court of Justice. Developments in legislation have aimed to strengthen the EU anti-money laundering and countering the financing of terrorism (AML/CFT) framework. These include amendments to the 4th Anti-Money Laundering Directive (4AMLD) introduced by the 5th Anti-Money Laundering Directive (5AMLD).
Please click here to access Irish anti money laundering legislation which comprises the Republic of Ireland’s programme of compliance with the provisions of EU directives.
Readers can read a 2024 report from the Commission to the European Parliament and the Council on the implementation of the 4th Anti-Money Laundering Directive here.
European Union AML package
Since 2017, a number of prominent money laundering cases involving EU credit institutions and professionals and undertakings revealed the existence of structural weaknesses in the current system. On 7 May 2020, the European Commission adopted an action plan to address the identified weaknesses. Click for the action plan for a comprehensive Union policy on preventing money laundering and terrorism financing built on six pillars .Click here for the text of the action plan.
In July 2021 the European Commission presented a package of legislative proposals to strengthen the EU's anti-money laundering and countering terrorism financing rules (AML Package). The AML Package also included the proposal for the creation of a new EU authority to fight money laundering. Click here for details of the AML package on the European Commission website and click here to access an article by A&L Goodbody solicitors on the subject published in March 2022.
Click here for an overview of AML and latest developments on the European Commission website.The European Parliament voted on its final approval of the AML Package in April, 2024 .Click for a press release from the European Parliament on adoption of the AML package.The European Council adopted the package on 30 May 2024 . The two regulations and the directive were published in the Official Journal on 19 June 2024.
The AML Package comprises regulations and directives described below .
The current framework is of anti-money laundering directives which are not directly applicable and which provide for minimum rules which member states are required to implement through national legislation. This can lead to fragmentation, difference of interpretations and divergence in application of anti-money laundering rules and weakness in enforcement. The adoption of AMLR will establish a single rulebook to harmonize and reinforce rules. There will be set out detailed substantive requirements that are directly applicable throughout the EU including for example in the areas of customer due diligence, politically exposed persons, beneficial ownership and reporting obligations.
The draft text provides that the regulation enters force twenty days from publication in the official journal and applies three years from date of entry into force.
The proposed directive will require transposition into national law. The provisions include rules such as reinforced rules on beneficial ownership registers, rules on national supervisors and Financial Intelligence Units in Member States. Provisions must be transposed three years from date of publication.
Provisional agreement has been reached on the regulation to create a new European authority for countering money laundering and financing of terrorism. Expected timelines are its legal establishment in 2024, administratively operational by 2025 and that direct supervision will begin in 2028.
AMLA will have direct and indirect supervisory powers over high-risk obliged entities in the financial sector. AMLA will directly supervise the riskiest cross-border financial entities and coordinate national supervisory authorities and supervisory actions, including for the non-financial sector. AMLA will also be entrusted with an FIU coordination function.
In February 2024 Frankfurt Germany was chosen by the European Parliament and Council as the seat of AMLA.
4.Cryptoasset regulation
Reference is made here to crypto asset regulation because the AML Package proposed a revision of regulation 2015/847/EU on information accompanying transfers of funds (2015 Regulation) .The repeal and replacement of the 2015 Regulation and the adoption of Regulation on Markets in Crypto-assets (MiCA Regulation ) form part of a broader EU Digital Finance Strategy but for the sake of completeness those regulations are briefly described here.
The 2015 Regulation applied only to transfer of funds, meaning banknotes and coins, scriptural money and electronic money. The proposal was to extend the scope in order to also cover transfer of virtual assets. Also proposed was a legislative initiative on traceability of crypto-asset transfers for preventing money laundering and counter-terrorist financing.
Regulation (EU) 2023/1113 on information accompanying transfers of funds and certain crypto-assets and amending Directive (EU) 2015/849 applies from 30 December 2024 and repeals the 2015 Regulation from that date. The new regulation on the traceability of transfers of funds ensures the traceability of crypto-assets transfers and the authentication of users, aligning with FATF standards.
The Regulation on Markets in Crypto-assets (MiCA Regulation ) was adopted by the Council of the European Union on 16 May 2023 , following approval from the European Parliament on 20 April 2023.This was part of a broader EU Digital Finance Strategy package and it was the first European-level legislative initiative aiming to introduce a comprehensive regulatory framework for crypto-assets, and covering issues from issuance of crypto-assets, through provision of services in crypto-assets to preventing market abuse in crypto-asset markets.
The MiCA Regulation applies from 30 December 2024 with certain articles and titles applying by derogation from 29 June 2023 and 30 June 2024 (article 149).
Overall, the new MiCA Regulation and the updating of the transfer of funds regulation will significantly increase the monitoring of crypto-asset transfers for money laundering and terrorist financing by competent authorities throughout the EU.
These pages are provided as resources and information only and nothing in these pages purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the pages. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of these pages, we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained in these pages.
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