The long-awaited new EU laundering package has been adopted and will enter into force on July 1, 2027.
The current anti-money laundering legislation already imposes a wide range of requirements for lawyers, real estate agents and financial institutions to prevent money laundering and terrorist financing, but with this new anti-money laundering package there will be further tightening and more uniform rules, and more industries will be covered by the legislation. In addition, a new supervisory authority will be created and more extensive powers will be granted to financial intelligence units to combat money laundering and terrorist financing.
Although the anti-money laundering package won't come into force until 2027, it's important to consider now whether and to what extent the rules will affect your business.
Despite the fact that money laundering legislation already imposes strict requirements on a number of industries regarding their efforts to prevent money laundering and terrorist financing, it is now well known, both nationally and across the EU, that money laundering and terrorist financing occur on a large scale - and that this often occurs through the abuse of financial systems and the actors involved in financial transactions, including lawyers, real estate agents, accountants and financial institutions. The money laundering legislation and the new tightening measures adopted in the new EU money laundering package are therefore an important tool to prevent and combat money laundering and terrorist financing.
The new EU laundry package consists of 4 parts:
1. A new anti-money laundering regulation (AMLR)
2. A new Money Laundering Directive (AMLD6)
3. A regulation establishing a single EU money laundering
supervisor (AMLA-R)
4. An amendment to the Money Transfer Regulation
As something new, the anti-money laundering package contains a regulation and not just directives, as is the case today. This means that the rules in the Money Laundering Regulation will apply directly to the obligated companies and thus do not need to be implemented in EU countries through national legislation.
This ensures a common set of rules and a unified legal framework for combating money laundering and terrorist financing across all EU countries.
The biggest challenge with the current regulation is that the rules are not directly applicable, which has led to different national approaches and different implementation of the rules.
What are the requirements for preventing money laundering and terrorist financing today?
The Money Laundering Act already requires a number of different industries to prevent and combat money laundering and terrorist financing, including lawyers, accountants, real estate agents and various financial institutions. The Anti-Money Laundering Act already requires that the covered industries have (written) procedures for risk management and customer knowledge in connection with the activities covered by the Anti-Money Laundering Act.
The Money Laundering Act already entails a number of obligations for the industries covered, including e.g:
- Preparing a written risk assessment for the company's activities
- Preparation of anti-money laundering policy and written procedures for handling KYC procedures etc.
- Implementation of Know Your Customer procedures to ensure identification and legitimization of customers, including beneficial owners
- Preparation of risk assessments for certain customer relationships
- Customer relationship monitoring
- Investigation and registration of suspected money laundering or terrorist financing
- Reporting suspected money laundering or terrorist financing to the Money Laundering Secretariat
- Preparation of documentation and storage of information such as documents from the KYC procedure, including identification documents, etc.
- Implementing whistleblower scheme for companies with over 5 employees
Extending money laundering rules with the new EU money laundering package
The Money Laundering Package introduces several new measures and tightening measures in areas where Member States have had a varying approach so far.
The main changes include the following:
- more industries are covered by the rules,
- There will be new requirements for the obligated companies' KYC procedures,
- new requirements for the obligated companies' internal processes and compliance setup, and
- a supranational supervisory authority, AMLA (Anti-Money Laundering Authority), is established.
New obligated companies
Today, it is primarily financial institutions, accountants, lawyers and real estate agents that are covered by the rules of the Money Laundering Act.
The circle of business types that are obliged to comply with money laundering regulations will be expanded with the new money laundering package, so that the following new business types will also be covered by money laundering regulations:
- Dealers in precious metals and precious stones
- Traders of high-value and transportable goods (e.g. motor vehicles, watercraft and aircraft)
- Football agents and professional football clubs
- Crowdfunding services and intermediaries
- Crypto sectors
- Operators that help third-country nationals obtain residency rights through investments
New requirements for KYC procedures
It is a fundamental principle of anti-money laundering regulation and prevention that obligated companies must know their customers, as this makes it easier to identify possible money laundering attempts.
This means that companies need to know who their customers and beneficial owners are, what business they are in and what the purpose of transactions is. Depending on the risk associated with the customer, it may also be necessary to obtain information about the source of the customer's funds.
The KYC procedure must thus be adapted to the risk associated with the customer in question.
The new EU money laundering package places new requirements on these KYC procedures in several areas, including identifying customers and owners, updating customer information and continuous monitoring.
The new requirements are primarily related to the following issues:
- Increased awareness of customers from high-risk third countries identified by the commission
- Obtaining additional identity information about the customer and beneficial owners, including birthplace, residence, nationality and refugee status (not applicable for low-risk customers)
- Lowering the threshold for when the KYC procedure must be performed for occasional transactions. The threshold is lowered from EUR 15,000 to EUR 10,000
- The definition of a close associate of a politically exposed person will also include siblings
All obligated companies should therefore review and, if necessary, update their internal KYC procedures to meet the requirements of the upcoming EU laundering package.
New requirements for internal processes and compliance setup
In addition to the stricter requirements for know-your-customer procedures, the EU laundering package also introduces new requirements for the compliance setup of obligated companies. This includes, among other things:
- That obligated companies must establish an independent audit function (possibly an external auditor or Attorney) that audits the internal policies, procedures and controls
- New requirements for company employees' knowledge of anti-money laundering legislation and the company's risk assessment, internal policies, procedures and controls
- New requirements for the company to appoint employees responsible for ensuring the company's compliance with the Money Laundering Act. These employees are also required to have the necessary skills, knowledge and expertise to fulfill this function, as well as be of good reputation, honesty and integrity.
The new EU whitewash supervisory authority, AMLA
Finally, the new EU money laundering package introduces a significant structural change in the form of the creation of the single EU money laundering supervisory authority, AMLA (Anti-Money Laundering Authority).
AMLA will ensure a uniform and consistent application of anti-money laundering rules in the EU, and one of its key tasks will be to issue guidelines in the field of money laundering. AMLA will also coordinate and supervise the national anti-money laundering authorities and the companies in the EU with the highest risk of money laundering.
Today, there are a number of anti-money laundering supervisory authorities that oversee compliance within the various industries covered, including the Danish Financial Supervisory Authority, the Danish Business Authority, the Danish Gambling Authority and the Danish Bar and Law Society. These supervisory authorities will continue to supervise the compliance of obliged Danish companies with the money laundering rules.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
