Negotiations over amendments to the Fourth Money Laundering Directive have reached a conclusion
As reported in the last policy update, trilogue negotiations to develop a final compromise position on amendments to the Fourth Money Laundering Directive commenced in March this year. Despite delays, the negotiations were unexpectedly concluded on Friday 15 December, signaling possible future changes to the EU’s AML regime.
A copy of the compromise agreement has not yet been released. Trilogue discussions between the European Parliament, the EU member states (represented by the Council) and the EU Commission, focused on the following key points of contention:
- the Council’s proposal to apply less stringent rules to customer due diligence on EU PEPs (domestic PEPs) compared to non-EU PEPs (third country PEPs), which has been strongly opposed by the European Parliament
- the accessibility of beneficial ownership registers. The European Data Protection Supervisor has been very critical of the potential impact of the proposed registers on the rights to privacy and data protection
- the specific information that should be included on the beneficial ownership registers
- the parliament’s proposal to lower the threshold for the definition of beneficial ownership of a corporate entity from 25 per cent to 10 per cent, which has been opposed by the Council
- the European Parliament’s proposal that the Commission should consider a wider range of factors in determining whether a country is a ‘high risk third country’
- the parliament’s proposal to require obliged entities to contact their customers to review the beneficial ownership they hold within one year of the amendments entering into force.
The compromise proposal will also seek to enhance EU Financial Intelligence Units’ access to information. It is not yet clear what this will mean in practice.
We will analyse the policy proposals once these are released early next year. The Brexit timeline means the UK might not be directly affected by legislation that results from these. However, for political and economic reasons the UK Government will likely seek to replicate most AML measures applied in the EU member states.
Any further changes to the EU’s AML regime are likely to have an impact on solicitors in the UK.