4th Anti-Money Laundering Directive and 2d Fund Transfers Regulation- General overview and impact on payments Payment systems market expert group Brussels, 3 December 2015 European Commission DG Justice and Consumer JUST A3 Company law
Financial Action Task Force (FATF) Global standard-setter for standards to combat ML and TF Intergovernmental body with 36 members and the participation of over 180 countries through a global network of FATF-style regional bodies Commission = one of founding members of FATF original FATF standards amended in the aftermath of 9/11 (TF), fully revised in June 2003 ( Third AMLD), latest revision of standards in February 2012 ( new EU framework)
The new "AML" package 1. Directive (EU) 2015/849 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (4th AML Directive) 2. Regulation (EU) 2015/847 on information accompanying transfers of funds (2d FTR) 2 years of transposition period (by 26 June 2017)
Main elements of the Funds transfer regulation general rules Mainly a technical update : Rec. 16 of FATF "Countries should ensure that financial institutions include required and accurate originator information and required beneficiary information on wire transfers" enhanced transparency throughout the payment chain Some clarifications on the role played by financial institutions (payer/payee/intermediary): accuracy of the information: no transfer of funds when no fulfillment of CDD requirements detection of missing information: PSPs of the payee and intermediary PSPs shall suspend or reject the transfer of funds ;
Main elements of the Funds transfer regulation - consequences for the EU (i) Transfers of funds within the EU ("domestic" funds transfers) = Simplified customer due diligence - payer's and payee's payment account number only (or unique transaction identifier) - no verification from the payer's PSP unless transfers in cash or anonymous e-money; ML/TF suspicions (ii) Transfers of funds to outside the Union - - above 1000 = full customer due diligence - - below 1000 = names of the payer and the payee; payment account number (or unique transaction identifier) - - no verification from the payer's PSP unless transfers in cash or anonymous e-money; ML/TF suspicions
Main elements of the 4th AML DIRECTIVE relevant for payments risk-based approach and customer due diligence risk assessments reporting obligations and central contact point beneficial ownership transparency for companies and trusts Scope unchanged as regards financial sector
Risk-based approach and customer due diligence (CDD) General objective: EFFECTIVENESS OF THE AML REGIME Clearly understand ML/TF risks and adapt system to nature of risks Make CDD-rules more risk sensitive based on indicative and non-exhaustive risk factors (customers, products and geographical areas) simplified measures where risks are demonstrated to be less enhanced measures where risks are greater
Risk-based approach and customer due diligence (CDD) Remaining "specific" risks scenarios Proven low risks: simplified due diligence or exemptions ("may") E-money: simplified due diligence Gambling service providers: exemptions Suspicion of high risks: enhanced due diligence ("shall") Dealing with clients in third country identified as "high risk" (EU list) Cross-border correspondent relationship with third countries Transactions involving Politically Exposed Persons (and family members) domestic, EU and non EU
Risk assessments : several layers Obliged entities: identification and assessment of the risks of ML/TF Risks factors: customers, countries or geographic areas, products, services, transactions or delivery channels Proportionality to the nature and size of the obliged entity Policies, controls and procedures in place to mitigate and manage effectively ML/TF risks Member States: identification and mitigation of the risks Identification of areas at higher or lower risks Draw up appropriate rules accordingly to each sectors Make information available to obliged entities European Commission: supranational risk assessment of the ML/TF risks affecting the internal market and relating to cross-border activities All the sectors covered by the Directive Current and emerging risks (virtual currencies) Risk assessment depending on levels of threats and vulnerabilities Recommendations to Member States on mitigating measures (comply or explain) Joint opinion of the ESAs = financial sector; FIUs; Europol; AML/CFT experts
Reporting obligations and Central Contact point Cooperation between FIUs is reinforced Exchange of information spontaneously or upon request (FIU.net) Dissemination of the information Particular focus on tax crimes Reporting obligations Territorial approach: where the obliged entity is established FE: HOST authority FPS: HOME authority CCP for Pis and EMIs When? FE How? Regulatory technical standards on circumstances where the CCP is appropriate and the functions
Beneficial ownership information Identification of Beneficial Owner (BO) for companies and legal arrangements (the ultimate BO must be found) Storage in a central registers held at national level for companies and trusts (e.g. commercial register, company register, public register) Access to these central registers to: Competent authorities and FIUs without any restriction (including cross-border); Obliged entities when they are conducting CDD Other persons that have a legitimate interest (not for trusts) 11
Thank you for your attention Contact: marianne.carrubba@ec.europa.eu