Flows of illegal money can damage the integrity and stability of the financial sector but also may threaten the internal market of the European Union. The need to promote financial stability and curb the dangers fraught in Anti Money Laundering, has promoted the EU Parliament to pass the Fourth Anti Money Laundering Directive which has come into force on the 26th of June 2015. EU Member States will have to implement the Directive into domestic law within two years.
The ambit of the Directive covers a range of businesses including banks, auditors and accountants and its rules will also have to be complied with, by any businesses involved in cash payments for goods worth at least €10.000.
The central aspects of the Directive are the following:
(a) EU Member States shall create registers, where records of the ultimate beneficial owners of businesses will be kept. Authorities within each country but also by investigative journalists, who can demonstrate a legitimate interest in gaining access to such information, will have access to these registers.
(b) Specific reporting obligations are introduced for banks, auditors and lawyers on suspicious transactions made by their clients.
(c) Senior managers will incur greater responsibility to approve policies, controls and procedures of their companies.
(d) Sanctions for non compliance will be significantly harsher to both natural and legal persons; and
(e) Entities shall take steps to manage and mitigate the risks of Money Laundering by introducing policies and procedures such as consumer due diligence controls.
Hence, the above changes will require businesses to re asses their current systems in order to ensure their efficient functioning and at the same time Member States will need to ensure they implement and comply with the said Directive by the 26th of June 2017.
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