What to expect in July 2021 according to Commissioner Mairead McGuinness European AML Supervisor and Single Rulebook:
The European Commission presented an AML package in July 2019, where it highlighted a number of deficiencies in implementation of the EU anti-money laundering framework, while the recent money laundering scandals led the need to develop a new comprehensive approach at the EU level.
Hence, on May 7, 2020, the European Commission presented an AML package which included an action plan for a new single EU AML system, directed to strengthen the fight against AML/CFT.
In a nutshell, the aim of the Commission was to put in place a system of harmonised standards and to establish an EU-level supervisory entity working in close cooperation with the relevant local supervisory authorities.
On May 17, 2021, the European Commissioner for Financial Services, Financial Stability and Capital Markets Union, Mrs. Mairead McGuinness, reiterated, during her speech at the AML Intelligence Boardroom Series online event, the importance of establishing a harmonised approach towards combatting money laundering at EU level with a Single Rule book and the new AML Authority.
As an introduction, the Commissioner first referred to the detailed Action Plan on Anti-Money Laundering/Combating the Financing of Terrorism ("AML/CFT”) issued on May 7, 2020. As a reminder, the 2020 Action Plan consisted of the following six broad areas:
While the detailed measures of the Commission’s AML package will be unveiled in July 2021 in more detail, the Commissioner already shared some elements on what to expect on Union’s plans that are under the confirmation phase.
In order to address the challenges in the field of AML/CFT outlined in the AML package of 2020, the Commissioner stated that forthcoming AML package is expected to contain the following building blocks:
Direct applicable EU regulation:The lack of sufficient transposition of AML rules will be tackled by enhancing the rules for the private sector in a directly-applicable EU regulation. The application of AML rules will be strengthened with harmonising rules across the EU in most substantial areas. Also, the goal will be to improve the supervision and address any shortcomings regarding the coordination of Financial Intelligence Units, while giving the discretion to the Member States to organise their own system.
Virtual Asset Service Providers: Another important aspect of the 2021 AML package is to include all types of Virtual Asset Service Providers as obliged entitles covered by AML rules and align the list of obliged entities with the latest Financial Action Task Force (FAFT). The EU is aiming to ensure the traceability and transparency of details of transfers of virtual assets and to add those types of transfers under the scope of the existing Transfer of Funds regulation.
Customer Due diligence and beneficial ownership, already included in the AML Directive, are two examples of areas where the 2021 AML package plans to increase details.
Legally binding technical standards to be developed by the future AML Authority is another important component of the rulebook which aims to add more granularity and harmonisation to top level rules in the regulation.
Cash and bearer instrument will be tackled. While most proceeds of criminal activity are still in cash, the new plan is looking to set an EU-wide upper limit for cash purchases of €10,000. Indeed, the Commissioner admitted that the current rules, according to which operators that make or receive payments worth €10,000 or more when trading in goods are subject to AML rules, has not worked well
This will be the flagship of the 2021 AML reforms. The new AML authority will combine supervisory and FIU coordination tasks under one roof. Different roles will be assigned to the AML authority such as:
A limited number of financial institutions would be directly supervised by the Authority, relieving national supervisors of a significant burden. The direct supervision will be carried out via Joint Supervisory Teams working with national supervisors, which will also help bring together the Authority and national supervisors.
The new Authority will be funded to a significant degree from fees from obliged entities. The timeframe for the Authority to initiate its action will be in 2024, reaching full staffing in 2025 and starting carrying out direct supervision in 2026.
At the end of her speech, the Commissioner emphasised that the legislative package described above is not the only thing the Commission is working on in the AML area. Indeed, the following non-legislative actions are planned:
The AML package of 2021 entails new reforms towards to create a robust EU anti-money laundering and counter-terrorist financing EU regime
Obliged entities will have to keep up to date with the forthcoming measures that will be unveiled in July 2021 in more detail for its application and take all necessary steps to strengthen their AML/CFT framework, if needed, based on the new reforms.
Avantage Reply will regularly follow up this subject and keep you fully updated with the new measures!
We will keep a track and the team of experts of the Financial Crime and AML compliance Unit, will be able to assist you in the following areas for strengthening your business AML/CFT framework and design always in compliance with the latest regulatory updates:
Speech 17 May 2021
The AML package 2021
Single Rule Book