The AMLD 4 contains new rules to combat money laundering and terrorist financing in the European Union (EU). The directive aims at protecting the financial system by means of prevention, detection and investigation of money laundering and terrorist financing by unifying the approach of the EU member states. It is applicable to credit institutions, financial institutions, certain natural or legal persons acting in the exercise of their professional activities (such as auditors, notaries, trust or company service providers, persons trading in goods to the extent that payments are made or received in cash in an amount of € 10,000 or more, providers of gambling services). The aim of the new AMLD 4 is to enhance cooperation between and uniformity within member-states. The IFTR contains rules to ensure the full traceability of funds transfers within the European Union, as well as funds transfers to and from the European Union. Both the AMLD4 and the IFTR take into account the recommendations of the Financial Action Task Force (2012).
The AMLD 4 stresses a risk-based approach, which requires evidence-based decision making to effectively target the risks of anti-money laundering and terrorist financing. If an obliged entity intends to apply simplified customer due diligence, it is required to document its risk assessment. It is important that obliged entities are well prepared and trained for the stricter documentation requirements and are equipped to take possible remediation actions. The AMLD 4 contains a broader definition of PEPs and following AMLD 4, a central register of Ultimate Beneficial Owners would be established. The IFTR requires all payment service providers to provide, amongst others, information on the payee in addition to information on the payer.
Author: Leen Groen