Beneficial Ownership Registers
The main focus of the latest directive is allow public access to centralised and public registers of companies and their beneficial owners. There will no longer be a requirement to demonstrate legitimate interest. Banks are obligated to report discrepancies between the information contained on public registers and beneficial ownership information obtained through CDD.
A hallmark of the new regulation is its mitigation of anonymous parties in the payment chain. Sounds straightforward, but in the case of cryptocurrency products, anonymity is a central tenet. From peer-to-peer exchanges to crypto tumblers, regulation is attempting to tackle these issues. In addition to specifically addressing cryptocurrencies, the updated regulation also covers the following areas related to the storage and movement of funds.
Prepaid cards are largely anonymous, but 5AMLD will subject them to further customer due diligence. The threshold at which prepaid cards will be subjected to due diligence is dropping from EUR 250 to EUR 150.
What’s more, the new regulation prohibits the use of prepaid cards issued outside the EU unless they were issued in a country that enforces an equivalency of 5AMLD.
Following on the regulation of 4AMLD, cryptocurrency exchanges and wallets are now obliged to perform the same AML checks traditional financial institutions must make.
These entities have to register with their respective financial authority to conduct business within the EU. They will be required to carry out customer due diligence, monitor behaviour and report suspicious behaviour.
Politically Exposed Persons (PEPs)
EU member states are requested to issue a list of politically exposed persons. Used interchangeably with the term “senior foreign political figure,” PEPs are ear-marked as higher-risk for financial institutions.
While PEP status is not indicative of criminal behaviour, 5AMLD requires on-going monitoring of these individuals and updates on changes to their risk profiles.
High-risk third countries
The European Commission has adopted a list of third countries with deficiencies in their anti-money laundering and counter-terrorism financing frameworks. Banks and other entities covered by 5AMLD are required to increase due diligence on operations involving these countries to more effectively identify suspicious activities.
Traders of high-value goods such as fine art have to report suspicious activity and perform customer due diligence checks under 5AMLD.
Those acting as intermediaries or trading in high-value goods must apply for AML identity verification checks for transactions exceeding EUR 10,000.