The Fourth Anti-Money Laundering Directive recasts the existing Third Anti-Money Laundering Directive (Directive 2005/60/EU) and the corresponding Implementing Directive (Commission Directive 2006/70/EC). It takes into account the 40 new recommendations adopted by the Financial Action Task Force (FATF).
Speaking on the main challenges faced by UK businesses looking to ensure compliance with the Fourth Anti-Money Laundering Directive, Managing Director Jeffrey Davidson commented:
“Firstly, the scope of obliged entities now includes providers of gambling services, traders accepting cash payments above EUR 10,000 and occasional transactions that constitute a transfer of funds (including money remittances) exceeding EUR 1,000. AML4 affects a larger number of UK businesses for whom AML3 did not.
AML4 requires firms to be more thorough in adopting and documenting a risk-based approach, placing a key focus on Customer Due Diligence (CDD) and the vetting of Politically Exposed Persons (PEPs). In brief, AML4 sees Customer Due Diligence (CDD) policies standardised and rules surrounding PEPs strengthened. The impacts are far reaching, necessitating additional manpower, new technology, resources, and improved processes.
Increased emphasis on justification; institutions must be able to evidence why they have chosen either enhanced due diligence or simplified due diligence when on boarding and monitoring customers. This may require new staff and/or training sessions.
However, in comparison to other EU member states, the UK has it relatively easy. For instance, one of the biggest requirements is that each member state now must have a central register of Beneficial Owners. Complex corporate structures have at times made it difficult to identify beneficial owners, and the obligation injects a new level of transparency. In the UK however, impact will be minimal as we’re well ahead in this regard; Companies House (where the Persons with Significant Control (PSC) register will be held) has both open publication and free access. Conversely, according to the Financial Times, 17 EU states haven’t even begun to implement changes, undermining the legitimacy of AML4’s authority.”
Read Jeffrey’s comments in economia here