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On 17 January, the Council of the European Union (EU) and the European Parliament (EP) reached a provisional agreement on a new legislative package that aims to strengthen EU rules on money laundering (AML) and terrorist financing activities (CFT).
The Commission presented its AML/CFT legislative package on 20 July 2021, aiming to establish a new EU anti-money laundering authority (AMLA), recast the regulation on transfers of funds for crypto-assets transparency and traceability, and include regulations and directives on AML mechanisms and requirements for the private sector.
The agreed package includes a new Regulation setting forth a single AML and CFT rulebook (AMLR) and the sixth AML Directive. With these legislative changes and the establishment of the AMLA, the EU is on the verge of significantly reforming its AML and CTF frameworks.
The key elements of the package include harmonising rules, expanding the scope of obliged entities, enhancing due diligence measures, and setting cash payment limits, with which the EU seeks to mitigate risks of financial crimes through the established financial system.
The main elements of the political agreement – which is yet to be finalised in the coming weeks – reached between the Council and the Parliament are the following:
Already established financial intelligence units (FIUs) in the Member States will have immediate and direct access to financial, administrative, and law enforcement information, enhancing their ability to prevent, report, and combat money laundering and terrorist financing. FUIs will continue to circulate information to their respective competent authorities. When making decisions, FIUs must apply and consider fundamental rights and will have the ability to suspend or withhold consent to a transaction.
The agreement mandates effective supervision of all obliged entities within Member States’ territories. Supervisors will report instances of suspicions to FIUs and adopt a risk-based approach in their operations. New supervisory measures for the non-financial sector (so-called supervisory colleges) will also be introduced.
Both the EU and Member States will conduct risk assessments at their respective levels, with the Commission making recommendations to Member States based on these assessments.
To complete the overhaul of the EU’s AML package, the EU needs to decide on the location of the AMLA. So far, nine Member States have submitted applications to host the institution, and the final decision is scheduled to be made jointly by the EP and the Council by 30 January 2024.
With respect to the political agreement, the finalized texts of the agreement will be presented to Member States representatives and the EP for approval, before formal adoption and publication.