EU's New AML & CFT Rules to Combat Money Laundering and Terrorist Financing
The European Union has taken a significant step forward in its efforts to combat money laundering and terrorist financing with the introduction of its new Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) package. This comprehensive reform replaces the previous directive-led framework with a more harmonized, regulation-led approach, ensuring a consistent application of AML/CFT rules across all EU member states.
One of the key features of the new package is the enhanced access to beneficial ownership information. For the first time, individuals with a legitimate interest, including journalists, media professionals, and civil society organizations, will have direct and unfiltered access to beneficial ownership data held in national registries. This increased transparency will play a crucial role in exposing illicit financial activities.
To strengthen the regulatory framework, the EU has established a new Anti-money Laundering Authority (AMLA) and introduced a Single Rulebook, formally known as Regulation (EU) 2024/1624. This regulation exhaustively harmonizes anti-money laundering rules across the EU, closing loopholes that have been exploited by criminals.
The Single Rulebook extends anti-money laundering rules to a wider range of entities, including the crypto-sector, crowdfunding platforms, and non-bank mortgage and consumer credit providers. It also introduces new requirements for the purchase of high-value goods like vehicles, aircraft, and boats, ensuring that information on the ownership of these assets is available to national competent authorities.
To further enhance the fight against money laundering, the regulation sets tighter due diligence requirements, regulates beneficial ownership, and imposes a limit on cash payments. It also mandates that obliged entities implement robust internal policies, procedures, and controls to manage AML/CFT risks effectively and report suspicious activities to financial intelligence units (FIUs).
The new package significantly strengthens the authority of FIUs, empowering them to more effectively identify and investigate cases of money laundering and terrorist financing. It also grants FIUs the ability to halt suspicious transactions, providing them with a powerful tool to disrupt illicit financial flows.
The Single Rulebook will take effect on July 10, 2027, with certain provisions, such as those concerning football clubs and agents, coming into force in 2029. While this timeline gives businesses time to adapt, the significant changes required to comply with the legislation necessitate early preparation and action.
What should you do next?
Understand the regulation: Gain a thorough understanding of the new regulatory landscape and its implications for your business.
Complete a risk assessment: Evaluate your existing AML technology and processes to ensure they meet the increased regulatory scope. Align your systems and workflows with harmonized standards to reduce the risk of penalties.
Implement your remediation plan: Strengthen your due diligence frameworks to effectively identify and mitigate AML/CFT risks. This may involve updating your AML/KYC program, standards, and policies to improve customer verification and transaction monitoring.
Assign resources: While the Single Rulebook aims to simplify compliance processes, the initial implementation phase may require additional resources. Allocate sufficient personnel to manage the transition smoothly.
By taking proactive steps to understand and comply with the new AML/CFT regulations, businesses can contribute to the fight against financial crime and protect their reputation
If you would like any further information or support on the AML and CFT regulations please get in touch.