Fourth Anti-Money Laundering Directive


11 August 2017 - The Fourth Anti-Money Laundering Directive (No. 2015/849) (“4th AMLD”) is the most sweeping one to date. It was adopted on the 26th of June 2015 and gave Member States two years to reach full implementation. Amendments to the Directive were published in July 2016, halfway through the implementation period.

The Directive focuses on extending the scope of the previous directives whilst increasing transparency and aims at strengthening obligations with regards to rules on beneficial ownership, widening the definition of a politically exposed person (“PEP”) as well as extending the scope of the rules to the full gambling sector amongst other things.

One of the major changes brought about by the 4th AMLD is the introduction of the Ultimate Beneficial Owner (“UBO”) Register. Firstly the 4th AMLD defines UBOs in a manner which encompasses various possibilities and reduces uncertainties as to who the beneficial owner would be in situations with complex corporate structures and consequently the Directive stipulates that the UBO Register is to apply to all corporate entities, trusts, foundations and any other legal entities. The Register must contain adequate and accurate information which is to be accessible to authorities, Financial Intelligence Units (“FIUs”) and anyone who can prove legitimate interest. 

The introduction of the UBO register led to concerns being raised with regards to ease of access to information and transparency and privacy and this resulted in the UBO register for corporate entities and for trusts being kept separate. Furthermore a proposal was accepted allowing limited access to the trusts’ UBO register in situations where public access to the UBO’s information would expose them to the risk of harm. These are to be decided on a case by case basis.

The 4th AMLD also amends the definition of a PEP and includes in the definition, family members and close associates of the PEP amongst others. Once a PEP is no longer entrusted with a prominent public function, one still has to take into account the continuing risk posed by that person for at least twelve months

Another proposal put forward by the amendments to the 4th AMLD was that of information sharing through a centralised mechanism to allow FIUs to access information in a timely manner. FIUs are also to be given more power in their effort to acquire information required from any entities in an effort to combat tax avoidance and increase transparency.

The 4th AMLD also proposes amendments to the regulation of due diligence proceedings and requires entities to take a risk-based approach. In other words, if the risks are greater it should take enhanced measures, if the risks are simpler, it should take simpler measures. In fact the Directive does not define Customer Due Diligence instead focusing on a risk based evaluation of those situations where risks exist.

The implementation deadline for countries to incorporate the 4th AMLD into their national legislation was 26th June 2017 however due to various reasons some countries, including Malta, have missed the deadline.

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