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The European Commission officially censured Spain, the Netherlands and six other nations Wednesday for failing to transpose the EU’s latest anti-money laundering directive, 5AMLD, into national laws and regulations in time.

Issued June 19, 2018, with an implementation deadline of Jan. 10, 2020, 5AMLD requires the bloc’s 27 nations to build public registers of ownership data, extend AML and transaction-monitoring rules to cryptocurrency firms, give their financial intelligence units access to more datasets and authorize them to cooperate more frequently with foreign counterparts.

A month has passed since the deadline and Cyprus, Hungary, the Netherlands, Portugal, Romania, Slovakia, Slovenia and Spain—a country rated exemplary by the Financial Action Task Force—have still not implemented the directive completely, according to the European Commission, which launched infringement cases against those latecomers Wednesday.

Malta and the Czech Republic also failed to transpose 5AMLD by deadline but managed to do so in the weeks that followed.

“These stricter rules are vital to combat money laundering & terrorist financing,” the Commission’s Executive Vice-President Valdis Dombrovskis posted on social media Wednesday. “We expect countries to implement them fully & on time. […] This is a top priority.”

Infringement proceedings entail a four-step process that begins with a formal request for more information, such as the one given Wednesday.

In the absence of a convincing response within two months, the Commission can send a formal request to comply with EU law, refer the matter to the Court of Justice, and finally pursue penalties based on the extent of the breaches, their duration and the wealth of the country concerned.

Wednesday’s announcement is a product of the EU’s heightened focus on money laundering but can also be viewed as an argument for reforming the implementation process, Nicolas Veron, a senior analyst at Bruegel, a policy center in Brussels, told ACAMS moneylaundering.com.

“The Commission’s attention to transposition varies according to circumstances,” said Veron, who also works as a senior fellow at the Peterson Institute for International Economics in Washington, D.C. “This shows that financial crime has become a politically important issue, including for the European Parliament.”

EU officials on Wednesday did not identify which specific provisions of 5AMLD the nations failed to implement by Jan. 10, but reasons for infringement proceedings can range from minor failures to serious shortcomings.

Past cases, next steps

None of the EU’s then-28 nations implemented the EU’s previous AML directive, 4AMLD, by the June 2017 deadline, resulting in infringement proceedings against all of them, a spokesperson for the Commission told moneylaundering.com.

All have since declared themselves fully compliant but the Commission is “thoroughly reviewing” those claims, the spokesperson said.

Regular, widespread failures to implement directives have prompted calls to replace them with a system of direct regulations that would apply uniformly across the bloc.

“A regulation would indeed have the advantage of identical rules across the EU,” Alexandra Jour-Schroeder, the EU’s former commissioner of criminal justice, told moneylaundering.com in July 2019. “But it depends on whether we want the same rules or want flexibility for member states.”

The Commission has since been tasked with considering this possibility and making recommendations next year.

“We are clearly moving towards this type of format, which is not perfect but already much better and allows more frequent updates,” said Veron, who cited changes made since the EU’s Capital Requirement Directives came into force in 2014.

Contact Gabriel Vedrenne at gvedrenne@acams.org