The European Commission recently outlined four legislative proposals to strengthen the EU’s AML/CFT framework. The objective of these new proposed legislations is to improve suspicious transaction identification and to address any other loopholes in the current system. The proposed legislations address emerging challenges in the domain of technological innovation, including cryptocurrencies and integrated financial flows in the Single Market.
The first of the four legislative proposals is the creation of a new EU-wide AML authority. This authority will improve EU-wide AML/CFT supervision and encourage increased cooperation among Financial Intelligence Units (FIUs).
The second proposal is about a regulation that ensures that AML/CFT obligations are directly-applicable all over the EU. The Single EU Rulebook for AML/CFT will ensure consistency in AML/CFT rules across the EU. The rulebook will include obligations related to Customer Due Diligence, Beneficial Ownership and the responsibilities of supervisors and FIUs.
The third proposal is about the creation of a sixth Directive on AML/CFT which will replace the existing fifth AML directive. The sixth AML directive will prescribe rules for national supervisors and Member State FIUs.
The fourth proposed legislation will help trace transfers of crypto-assets. This will prevent the crypto-asset sector from being manipulated for financial crimes.
The European parliament and council will now discuss the proposed legislations. They are likely to be operational by 2024.
Source: European Commission