anti money laundering

As of 10 January this year, the EU’s fifth Anti Money Laundering Directive (AMLD5) has come into force in the EU. The new legislation imposes five key changes that directly influence the Know Your Customer (KYC) processes of financial institutions and now also crypto services providers. We summarise the five key changes for you:

  1. Scope extends to virtual currencies
    The regulatory scope has been extended by including two types of crypto service providers: virtual-fiat exchanges and custodian wallet providers. Read our latest blog for a more extensive explanation of the impact for such crypto services providers.
     
  2. UBO registers will be publicly available
    While AMLD4 previously introduced the Ultimate Beneficiary Owner (UBO) register based on legitimate interest, under ALMD5 it is mandatory that these registers become publicly available. The UBO’s name, month and year of birth, country of residence and nationality as well as the nature and extent of the beneficial interest held are now available. While more private information is only available for the Financial Intelligence Unit (FIU) or required CDD processes, many UBOs have expressed their privacy concerns as they fear that the publicly available information can also be misused.
     
  3. Enhanced due diligence required for business relationships with high-risk third countries
    AMLD5 imposes new requirements on organisations that have business relationships or conduct transactions involving countries that are identified by the EU as high-risk countries in relation to money laundry and terrorism finance. Additional compliance checks, mitigation measures and additional monitoring are required for these accounts.
     
  4. Electronic identification means comply with eIDAS
    AMLD5 specifically names electronic identification means that comply with the eIDAS regulations to verify the customer’s identity for customer due diligence processes. This addition clarifies which electronic identification solutions can be used for KYC purposes.
     
  5. Obligation to monitor certain customer profiles more intensely
    AMLD5 states that the degree and nature of monitoring shall increase for certain transactions. This specifically entails complex transactions, unusually large transactions, transactions conducted in an unusual pattern or transactions that do not have an apparent economic or lawful purpose. To identify such transactions, it is important to have accurate customer profiles and offer a personalised and compliant onboarding and monitoring approach. 


Even though several countries, including the Netherlands, have still not yet succeeded in implementing AMLD legislation in their national law, they will follow soon.

Do you want to know more about how this new legislation affects your organisation’s KYC processes and how you can design the process to be customer-friendly while remaining compliant? Check out our onboarding page. 

 

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