Commission proposal to strengthen transparency rules to tackle terrorism financing, tax avoidance and money laundering

Yesterday the European Commission announced it is proposing changes to the Fourth Anti-Money Laundering Directive. According to the press release the following is proposed:

  • Enhancing the powers of EU Financial Intelligence Units and facilitating their cooperation: the scope of information accessible by the Financial Intelligence Units will be widened, and they will have access to information in centralised bank and payment account registers and central data retrieval systems, which Member States will have to establish to identify holders of bank and payment accounts;
  • Tackling terrorist financing risks linked to virtual currencies: to prevent misuse of virtual currencies for money laundering and terrorist financing purposes, the Commission proposes to bring virtual currency exchange platforms and custodian wallet providers under the scope of the Anti-Money Laundering Directive. These entities will have to apply customer due diligence controls when exchanging virtual for real currencies, ending the anonymity associated with such exchanges;
  • Tackling risks linked to anonymous pre-paid instruments (e.g. pre-paid cards): the Commission also proposes to minimise the use of anonymous payments through pre-paid cards, by lowering thresholds for identificationfrom €250 to €150 and widening customer verification requirements. Proportionality has been taken into account, with particular regard paid to the use of these cards by financially vulnerable citizens;
  • Stronger checks on risky third countries: As mandated by the Fourth Anti-Money laundering directive, the Commission proposes to harmonise the list of checks applicable to countries with deficiencies in their anti-money laundering and countering terrorist financing regimes. Banks will have to carry out additional checks (‘due diligence measures’) on financial flows from these countries. The list of countries, mirroring the FATF list, will, for procedural reasons, be formally adopted on 14 July.

Today’s proposal will reinforce the measures introduced by the Fourth Anti-Money Laundering with the following changes:

  • Full public access to the beneficial ownership registers: Member States will make public certain information of the beneficial ownership registers on companies and business-related trusts. Information on all other trusts will be included in the national registers and available to parties who can show a legitimate interest. The beneficial ownerswho have 10% ownership in certain companies that present a risk of being used for money laundering and tax evasion will be included in the registries. The threshold remains at 25% for all other companies.
  • Interconnection of the registers: the proposal provides for the direct interconnection of the registers to facilitate cooperation between Member States.
  • Extending the information available to authorities: The Commission has proposed that existing, as well as new, accounts should be subject to due diligence controls. This will prevent accounts that are potentially used for illicit activities from escaping detection. Passive companies and trusts, such as those highlighted in the Panama Papers, will also be subject to greater scrutiny and tighter rules.

More information

Over Ellen Timmer, advocaat ondernemingsrecht @Pellicaan

Verbonden aan Pellicaan Advocaten, http://www.pellicaan.nl/, kantoor Capelle aan den IJssel (Rotterdam), telefoon 088-6272287, fax 088-6272280, e-mail ellen.timmer@pellicaan.nl ||| Weblogs: algemeen: https://ellentimmer.wordpress.com/ ||| modernisering ondernemingsrecht: http://flexbv.wordpress.com/
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