The recent introduction of the Fifth Anti-Money Laundering Directive (5AMLD) has widened the scope of firms/individuals who will be caught by the directive. Yet the 5AMLD has left some ambiguities relating to what constitutes a ‘money laundering offence’. Whilst EU member states must implement the 5AMLD into local law, a further Anti-Money Laundering Directive will be introduced: the Sixth Anti-Money Laundering Directive (6AMLD). EU member states have until 3rd December 2020 to implement this upcoming Directive into national law, whilst regulated entities have a deadline of 3rd June 2021.
It is worth mentioning that the UK has decided to opt out of complying with this further AML regulation as the Government assesses that the domestic legislation is already largely compliant with the Directive’s measures and in many cases “the UK already goes much further”.
The 6AMLD delves deeper and has been introduced to focus on the definition of these crimes and their sanctions. It also aims to promote the collaboration of member states when tackling money laundering.
This article explores the four key points within this upcoming 6AMLD:
1. ‘Money Laundering Offence’ – Defined, Explained and Expanded
One of the main changes the 6AMLD provides is the definition of what constitutes a ‘money laundering offence’ (in Article 3(1)); it specifies the types of conduct that will be punishable as a criminal offence. A prominent example being where there is a transfer of property and there is knowledge that such property is derived from ‘criminal activity’ for the purpose of concealing or disguising the illicit origin of the property, this will now constitute a money laundering offence.
The 6AMLD also specifies what defines a ‘criminal activity’ and has been narrowed down to twenty-two predicate offences to provide member states with more clarity. This is because, to constitute a money laundering offence, at least one of the twenty-two predicate offences listed in Article 2(1) must be evident. Therefore, when investigating whether a money laundering offence has occurred, member states should pay close attention to the criminal activities listed in Article 2.
Significantly of the twenty-two predicate offences listed, two examples include cyber and environmental crime. This is the first time that ‘cybercrime’ is mentioned in any AML Directive and it aims to broaden the scope to root out money laundering crimes more efficiently, through the inclusion of online activities.
Additionally, there has been an expansion in the definition of what a money laundering offence comprises to ‘aiding and abetting’ (Article 4). This extends criminal liability to accomplices in the money laundering offences as affiliates to any money laundering activity should not be let off easily.
2. Criminal Liability for ‘Legal Persons’ and Sanctions.
If any individuals within an organisation commit a money laundering offence and/or aid and abet in the laundering process for a company’s benefit, the Directive aims to extend criminal liability to legal persons (i.e. companies). This means legal persons can now be held criminally liable if they are caught money laundering.
With this extension of criminal liability now also falling to legal persons, this comes with strict sanctions. Some of these sanctions and penalties contain criminal or non-criminal fines. Further to this, Article 8 lists other punitive sanctions, i.e. being disqualified from the practice of commercial activities (temporarily or permanently); going under judicial supervision; or, the closure of the establishment which has been used for committing the offence.
3. Increased Penalties for Natural Persons
It is also worth noting that ‘natural persons’ will now face up to four years imprisonment for money laundering offences as the EU is requiring member states to increase this from a maximum of one year, which was the previous penalty. This is clearly showing that the EU aims to take a stricter approach with individuals who are caught money laundering and want to deter individuals from carrying out these offences in the future. It is worth mentioning, however, that many EU member states already have a much higher maximum sentence than this directive imposes.
4. Cooperation of Member States
Finally, the upcoming Directive promotes the collaboration of member states in the prosecution of firms/individuals who are conducting money laundering offences.
For example, in Article 10(3) of 6AMLD, where a money laundering offence has occurred, within the jurisdiction of more than one member state; the concerned member states shall cooperate when deciding which member will prosecute the individual/firm – with the aim of centralising proceedings in a single member state.
The Directive also provides factors to consider when determining this, including where the offence was committed; the nationality or residency of the offender; the country of origin of the victim(s); and, the territory of where the offender was found.
6AMLD and Laven
At Laven, our consultants are on hand to help identify the actions your firm needs to take to ensure you are compliant with new regulations and aware of all the risks outlined in this report. Whether this is through assisting with new policies and procedures that need to be put in place or providing online/in-person training for staff to make them fully aware of the regulatory burden.
Laven has also built Laven Tech, a unique Regulatory Technology (RegTech) solution that leverages advanced technology combined with our vast subject matter expertise. Our RegTech solution is designed to assist fund managers, service providers and investors to meet today’s growing demands.
