On December 3, 2020, the European Union’s Sixth Anti-Money Laundering Directive (6AMLD) came into effect for member states, to be implemented by financial institutions by June 3, 2021.
In that many countries – including Cyprus – are only now starting to implement the 5th directive, and given the trials of COVID-19 within the last 12 months, implementation of the latest directive may be seen as a challenge.
WHAT ARE THE AML DIRECTIVES?
The 1st AML Directive was introduced by the European Commission in 1990, and adopted by the EU to prevent the misuse of the financial system for the purpose of money laundering within the EU. Ever since, this legislation has been under revision in order to mitigate the ever-changing risks related to money laundering and terrorist financing.
While the 4th AMLD focused specifically on risk, the 5th – which started being transmuted into the national law of EU member states on January 10, 2020 – aimed to promote transparency in business transactions.
WHAT IS THE 6AMLD?
The main purpose of the 6th Directive (6AMLD) is to strengthen the fight against financial crime, especially those relating to cybercrime and technology.
When the Directive comes into effect, the number of offences which fall under the definition of money laundering will be expanded, while penalties will be harsher and wider in scope. These include the suggested judicial closure of companies involved in money laundering, and major bans on individuals involved in such acts. This significantly more punitive legislation for those who allow criminal liability will intensify the targeting of those corporations that fail to identify money laundering.
The implementation of the 6th AML directive ensures that firms – especially those operating within high-risk industries and utilising technology – understand the need to upgrade their compliance processes. In order to stay in line with the European Commission Directives, companies must implement comprehensive training, risk evaluation and assessment.
WHO IS ADOPTING IT?
The 6AMLD seeks to enhance the collaboration between the regulatory bodies of EU member states. While the UK, Ireland and Denmark have rejected its adoption, states such as Germany have not only begun to implement the new Directive but are already taking numerous steps ahead of time.
Many countries, including Cyprus, have only recently adopted the 5AMLD, but will working diligently towards the adoption of the 6AMLD by June of the coming year.
6AMLD AT A GLANCE
The most notable highlights of the 6th AML Directive are:
- Defining all 22 crimes linked to money laundering and harmonising the illegal essence of money laundering through the EU
- It will now be a felony to either support or commit an act of money laundering
- Bosses may be personally liable for corporate crimes under new ‘failure to supervise’ offences
- The provision of staff awareness as regards anti-money laundering on all predicate crimes identification
- Penalties for money laundering offences may now include prohibition from public welfare benefits, bans from conducting business, or the forced wind-up of businesses through which the offences were committed
- Extension of criminal liability to lawful persons
- Provision of a detailed description of money laundering
- The imposition of a minimum jail term of five years for serious offences
- Aggravating conditions can be extended for convictions relating to serious crimes such as corruption and trafficking in human beings
Tasos Ttiniozou, Executive Director of iSPIRAL. iSPIRAL is a Regulatory Technology provider with tremendous experience in KYC & AML solutions
