On the 5th July 2016, the European Commission proposed amendments to the Fourth Anti-Money Laundering Directive (4MLD) to further strengthen EU rules on anti-money laundering to counter terrorist financing and increase transparency about who really owns companies and trusts.
This proposal is the Commission’s first initiative to put into effect the Action Plan for strengthening the fight against terrorist financing of February 2016, and is targeted to prevent tax abuse and enhance tax transparency.
According to first Vice- President Frans Timmermans, “Today’s proposals will help national authorities to track down people who hide their finances in order to commit crimes such as terrorism. Member States will be able to get and share vital information about who really owns companies or trusts, who is dealing in online currencies, and who is using pre-paid cards. Making public the information on who is behind companies and trusts should also be a strong deterrent for potential tax-evaders.”
The key changes proposed by the European Commission, inter alia, include:
Extending the powers of EU Financial Intelligence Units and facilitating their cooperation; the scope of information made available to Financial Intelligence Units will be broadened, allowing such Units to access information on the holders of bank and payment accounts, through centralised registers or electronic data retrieval systems;
Bringing virtual currency exchange platforms and custodian wallet providers within the scope of the Anti-Money Laundering Directive. Such entities would be required to apply customer due diligence measures when exchanging virtual for real currencies;
Reinforcing transparency measures applicable to pre-paid payment instruments, by lowering thresholds for identification from €250 to €150 and extending customer verification requirements to minimise the anonymous use of these products;
Applying stronger and additional checks (“due diligence measures”) on financial flows from third countries;
Enabling the public to have access to certain information on ultimate beneficial owners of companies and business-related trusts. Access to information on all other trusts such as family or charitable trusts would be allowed upon showing a legitimate interest; and
Interconnecting national registers in view of facilitating cooperation between Member States.
The proposed amendments still need to be approved by the European Parliament and Member States before they come into law.
