The draft directive has two main objectives:
- Preventing the financial system being used for the funding of criminal activities; and
- Strengthening transparency rules to prevent large-scale concealment of funds.
The changes will amend the Fourth Money Laundering Directive (4MLD), which came into effect on 26 June 2017.
What are the proposed changes?
- Tackling risks linked to anonymous pre-paid instruments (e.g. pre-paid cards): the threshold for identifying the holders of prepaid cards to reduce from €250 to €150 and customer verification requirements will be extended
- Tackling terrorist finance risks relating to virtual currencies: virtual currency exchange platforms and custodian wallet providers to apply customer due diligence controls
- Stronger checks on risky third countries: improved checks on risky third countries with additional due diligence measures by banks on financial flows from these countries. The Commission has created and maintains a harmonised list of non-EU countries with deficiencies in their anti-money laundering prevent schemes
- Full public access to the beneficial ownership registers: enhanced access to beneficial ownership registers to improve transparency about the ownership of companies and trusts. The registers will also be interconnected to facilitate cooperation between member states
- Enhancing the powers of EU Financial Intelligence Units and facilitating their cooperation: FIUs to have access to information in centralised bank and payment account registers enabling them to identify account holders
Current status of MLD5
The EC published MLD5 on 5 July 2016, and initially proposed a 1 January 2017 transposition date. However, MLD5 remains with the European Parliament and the Council of the EU for consideration, although the negotiations are currently stalled.