EU Publishes Highly Anticipated AML Plan, New AML Directive

By Koos Couvée and Gabriel Vedrenne

EU officials on Tuesday published a wide-ranging plan to make life difficult for financial criminals by banning bearer shares, forcing transparency on legal entities, subjecting “golden passport” companies to anti-money laundering rules and enacting a swathe of other reforms.

The AML plan presented by the European Commission also aims to iron out differences between the AML rules of the bloc’s 27 nations and strengthen supervision through a new EU Anti-Money Laundering Authority, or AMLA, that will directly scrutinize a limited set of large, higher-risk banks and serve as a hub of financial intelligence.

“Today’s package is a response to very, very prominent cases of money laundering in the financial system, and we believe this … will plug the gaps,” Mairead McGuinness, the Commission’s head of financial stability, told reporters in Brussels on Tuesday.

The EU to date has promulgated AML policies through broad directives that give the bloc’s 27 nations considerable discretion to implement them as they see fit. But the practice has also created an uneven landscape of enforcement and supervision, and made sharing data on suspicious transactions and customers across borders difficult.

To eliminate those variances and ease exchanges of financial intelligence, the AML plan unveiled Tuesday features a 78-page regulation that, if approved by the European Parliament and the EU’s 27 national governments through the European Council, will override national rules to apply directly and uniformly across the bloc.

“Having directly applicable rules … with more detail … will not only promote convergence of application of [AML] measures across member states, but also provide a consistent framework against which the proposed new authority will be able to monitor the application of such rules,” officials wrote in the regulation.

The regulation would subject the “widest possible range of legal entities and arrangements” to beneficial ownership rules, require national governments to collect ownership information to a minimum threshold set by the bloc and obligate individuals who buy local real estate through offshore legal entities and trusts to identify themselves.

To prevent criminals from hiding behind frontmen, the plan would also force nominee shareholders and nominee directors of legal entities to disclose their status to national authorities and obtain “sufficient information” on the beneficial owners they represent.

The regulation would also limit cash payments to €10,000 and directly ban bearer shares, a high-risk category of financial instrument that officials already sought to eliminate four years ago—albeit indirectly—through the Fourth AML Directive.

Financial institutions would be prohibited from maintaining correspondent ties to shell banks, lenders that do not maintain a physical location in their country of domicile.

EU national governments would have to identify all government positions that qualify their holders as politically exposes persons, or PEPs, in the context of due diligence. The Commission would then collate and publish this information in a publicly available list.

AML rules would newly apply to advisory firms and professionals who help wealthy clients obtain EU passports or visas through one of the bloc’s remaining handful of controversial citizenship-by investment programs.

Jennifer Hanley-Giersch, managing partner of Berlin Risk, a consultancy in Germany, told ACAMS that the plan would ease the ability of EU financial institutions to create and adhere to group-wide AML policies that apply across borders.

More reforms, new directive

Tuesday’s AML plan would substantially impact financial technology-based companies, or fintechs, including by subjecting the entire cryptocurrency sector to AML requirements, extending the “travel rule” to cover conversions of one type of cryptocurrency into another and banning anonymously held digital wallets.

But the centerpiece of the proposals unveiled Tuesday is the new AMLA, which from 2026 onward would directly supervise the bloc’s “riskiest” cross-border institutions and be funded primarily by a new tax on financial institutions.

The AMLA will begin issuing guidance on the new AML rules by 2023, including explanations on the varying levels of exposure to financial crime that different categories of PEPs present, when financial institutions can outsource due-diligence processes and the countermeasures they should deploy when transacting with high-risk, non-EU countries.

“This package is definitely not cosmetic and goes much further than previous European reforms, especially with the creation of a European agency that can put a stop to regulatory shopping,” Pierre-Manuel Sroczynski, a consultant with Somerset Advisory in Paris, told

Transferring AML supervision to a bloc-wide agency could bring about “cultural changes” in large financial institutions that operate in more than one EU nation, he said.

“If the big groups manage to adapt, the shock will be very important for the smaller institutions considered risky enough for their supervision to be transferred to the European level,” Sroczynski said. “They will either have to review their risk policies and give up some activities to come back under national supervision, or dedicate more resources to AML.”

The agency will also provide national authorities “clarifications regarding risk-based supervision, specify minimum and maximum monetary penalties for AML violations, and develop a “common template” for filing suspicious transaction reports, or STRs, so that national FIUs can more easily share them with each other.

Tuesday’s plan dovetails with another significant package of reforms introduced Tuesday: the now-impending Sixth Anti-Money Laundering Directive, or 6AMLD, which, if enacted in its current form, will require the bloc’s nations to implement common standards of data collection and verification for their respective beneficial-ownership registries.

Under 6AMLD, EU members would also have to keep national, centralized databases of all bank accounts in their respective jurisdictions up to date, interconnected and accessible to the bloc’s other FIUs, while national regulators would give banks and other institutions more feedback on the quality of their compliance programs.

6AMLD would also expand FIUs’ current power to delay suspicious transactions to cover entire bank accounts when warranted.

Contact Koos Couvée at and Gabriel Vedrenne at

Topics : Anti-money laundering , Know Your Customer , Cryptocurrencies
Source: European Union
Document Date: July 20, 2021