EU Anti-Money Laundering Directives (AMLDs) are issued by the European Parliament regularly and are implemented by member states as part of their national legislation. The purpose of AMLDs is to combat Money laundering and terrorist financing and to create a harmonized regulatory framework across the EU. AMLDs address emerging Money laundering and terrorist financing and help close AML compliance loopholes.

What is the 6th AML Directive?

6AMLD, which  entered into force on 3rd June 2021, aims to:

• Harmonize the definition of money laundering across EU countries, closing legislative gaps.
• Extend the list of money laundering predicate offenses, including cybercrime and environmental crime.
• Add new categories of money laundering activities, such as aiding and abetting.
• Extend criminal liability to legal entities, such as companies and partnerships, if they do not prevent illegal activities.
• Implement a higher minimum sentence of 4 years of imprisonment for money laundering crimes.
• Building on the regulatory framework created by 5AMLD, 6AMLD provides more detailed guidance and addresses emerging threats related to money laundering.

What is the 5th AML Directive?

The fifth anti-money laundering directive (5AMLD) is set to enter into force on January 10, 2020

• Define and regulate cryptocurrencies; service providers must register and authorities must obtain owner information.
• Reduce transaction limits; prohibit transactions from cards issued outside the EU.
• Extend anti-money laundering/counterfeiting measures to high-value goods; for transactions above €10,000 including cultural artifacts.
• Publicize centralized UBO registers.
• Implement private UBO registries for bank accounts.
• Require UBO lists to be interconnected across EU countries.
• Require enhanced due diligence for high-risk third country customers.
• Requires Member States to publish functional PEP lists; EU maintains its own PEP list.

What is the 4th AML Directive?

The 4AMLD, which entered into force on 26 June 2017, sought to bring EU policies into line with international standards. The main provisions of the 4AMLD were:

• Expanding the scope of anti-money laundering (AML/CFT) and counter terrorist financing (CTF) obligations.
• Establishing centralized registries for ultimate beneficial ownership.
• Extending the scope of obligations for trustees of express trusts.
• Implementing a risk-based approach to AML/CTF obligations.
• Increasing criteria, such as geographic location, products, services and transactions, in customer risk profiles.
• Making tax crimes the crime of choice for money laundering.
• Including legal advice as a reporting requirement for tax crimes.
• Expanding the definition of politically exposed persons (PEPs) to include domestic entities.
• Increasing scrutiny of individuals at higher risk.

What are the first 3 AML Directives?

The first three AML Directives formed the basis for the European Union’s (EU) anti-money laundering and anti-terrorist financing efforts. The first Directive (1 AML Directive) was introduced in 1991 and focused on the definition of money laundering offences. The second and third Directives (2 AML Directive and 3 AML Directive respectively) were adopted in 2001 and 2005. The 2nd and 3rd Directives expanded the scope of the AML Directive to include new financial sectors and introduced customer due diligence (CDD) requirements. The 3rd Directive focused on risk-based approaches, improved customer due diligence and included measures on politically exposed persons (PEPs). These Directives played a key role in creating a comprehensive and ever-evolving AML framework in the EU.