The European Commission on Tuesday presented a package of legislative proposals “to strengthen EU rules against money laundering and terrorist financing.” The package also includes the proposal for the creation of a new EU authority to fight money laundering. The Authority will have the power to address binding decisions for the selected entities and impose administrative sanctions on legal persons up to a maximum of 10% of the turnover or 10 million euros, whichever is greater.
The objective of this package is to improve the detection of suspicious transactions and activities and to close loopholes that criminals use to launder illicit profits or finance terrorist activities through the financial system.
At the center of the legislative package is the creation of an EU Anti-Money Laundering Authority (AMLA), which will be the central authority that will coordinate national authorities to ensure that the private sector applies correctly and consistently. EU standards. The entity will also support financial intelligence units to improve their analytical capabilities around illicit flows and make financial intelligence a key source for law enforcement agencies.
The Authority is expected to have about 250 staff members. Of them, around 100 will work in the direct supervision of certain entities.
In particular, AMLA will establish a single integrated supervisory system across the EU, based on common supervisory methods and the convergence of high supervisory standards; will directly supervise some of the financial institutions (FIUs) that operate in a large number of Member States or require immediate action to address imminent risks; monitor and coordinate the national supervisors responsible for other financial entities, as well as coordinate the supervisors of non-financial entities; It will support cooperation between national Financial Intelligence Units and facilitate joint coordination and analysis among them, to better detect illicit cross-border financial flows.
Common rules against money laundering and terrorist financing. Existing national bank account registries will be interconnected, providing FIUs with faster access to information on bank accounts and safe deposit boxes.
The European Commission will also provide law enforcement authorities with access to this system, speeding up financial investigations and the recovery of criminal assets in cross-border cases.
Currently, only certain categories of cryptocurrency service providers are included within the rules against money laundering and terrorist financing.
The reform will extend these rules to the entire crypto sector, forcing all service providers to carry out the necessary checks with their customers. The reform guarantees the full traceability of cryptocurrency transfers, such as Bitcoin, and will allow the prevention and detection of their possible use for money laundering or terrorist financing.
In addition, anonymous wallets of crypto assets will be banned, applying the rules against money laundering and terrorist financing to the crypto sector.
The Commission also proposes an obligation for all crypto asset service providers involved in crypto asset transfers to collect and make accessible data on the originators and beneficiaries of virtual or crypto asset transfers. These new rules will significantly improve the supervision of crypto asset service providers and ensure compliance with the relevant measures in the FATF Recommendations.
Various law enforcement authorities indicate that the risks of crypto assets have increased further since 2019, linked to the growth of the cryptocurrency market. Credit institutions, investment firms, electronic money issuers and payment institutions are the sectors most exposed to these risks.
These proposals have been designed to strike the right balance between addressing these threats and meeting international standards without creating an undue regulatory burden for the industry. Rather, these proposals will aid the development of the EU cryptoasset industry, as it will benefit from an updated and harmonized legal framework across the EU.
Money laundering is a global phenomenon that requires strong international cooperation. The Financial Action Task Force (FATF), the global watchdog for money laundering and terrorist financing, issues recommendations to countries. A country that appears on the FATF list will also appear on the EU list.
Large cash payments are an easy way for criminals to launder money as it is very difficult to detect transactions. This is why the Commission has proposed an EU-wide limit of € 10,000 for large cash payments.
This limit is high enough not to question the euro as legal tender and recognizes the role of cash. There are already limits in about two-thirds of the Member States, but the amounts vary. Limiting large cash payments makes it difficult for criminals to launder dirty money. Furthermore, providing anonymous wallets of crypto assets will be prohibited, in the same way that anonymous bank accounts are already prohibited.
There will be two EU lists, a “black list” and a “gray list”. Upon listing, the EU will apply measures commensurate with the risks posed by the country. The EU may also list countries that are not included in the FATF list, but that pose a threat to the EU financial system based on an autonomous assessment.
The diversity of tools that the Commission and AMLA can use will allow the EU to keep pace with a complex and fast-moving international environment with rapidly evolving risks.
The legislative package will now be debated by the European Parliament and the Council.The future Authority should be operational in 2024 and will start its direct supervision work a little later, once the directive has been transposed and the new regulatory framework begins to apply.