EU Ambassadors confirmed in December 2017 that an agreement had been reached between the European Parliament, European Council and European Commission regarding the latest amendments to the Fifth Money Laundering Directive (5MLD).
The amended 5MLD is expected to contain extended provisions regarding both the implementation and the structure of Ultimate Beneficiary Ownership registers within the EU. Further amendments are progressing through Brussels that intend to advance and enhance the fight against money laundering. The commission found existing measures lacked coherence and comprehensiveness. These new measures proposed by the Commission will form the “Sixth EU Money Laundering Directive”.
Background of the “sixth money laundering directive”
- The European Commission suggested that the existing measures adopted in the proposed 5MLD were insufficient. The Commission was concerned with criminals exploiting these legislative discrepancies to launder criminal proceeds.
- A key objective of the 5MLD is to strengthen transparency rules to prevent large-scale concealment of funds. This highlights that the current national differences in the definition of money laundering, the scope and sanctioning of money laundering offences, means co-operation between national police forces is sub-prime.
- “6MLD” would define all predicate offences and impose greater obligations on firms to implement monitoring systems that detect proceeds that may be linked to these criminal offences.
What is expected of the sixth money laundering directive
- 6MLD is expected to define all 22 predicate offences and impose greater obligations on firms to implement monitoring systems that detect proceeds that may be linked to these criminal offences.
- 6MLD should also provide a comprehensive definition of money laundering, and Member States of the EU covered by the Directive must implement effective, consistent and disincentivised criminal sanctions.
- Predicate offences committed in another Member State or third country must be illegal in both the home country and the other respective jurisdiction.
- Members of the European Parliament have suggested a minimum prison sentence of five years should be imposed for serious money laundering offences. Additionally, MEPs would like to have convicted criminals of money laundering offences banned from being employed in the public sector.
- Facilitating, supporting and attempting to commit an offence of money laundering will also be illegal under proposals for the 6MLD.
- 6MLD will be comprehensive in that it is expected to include measures to extend criminal liability to organisations, such as companies or partnerships.
- If an organisation is criminally convicted of a money laundering offence, the directive will also make possible the conviction of relevant individuals within the organisation; thus, the failure to appropriately supervise any individual who may amass criminal liability to the organisation will be a corporate offence.
- The sanctions for those that are convicted of money laundering include the possible prohibition from public welfare benefits for four years, a temporary or permanent ban from conducting business, a compulsory winding-up of the organisation and a temporary or permanent closure of business units through which the offences were committed.
Member States will have two years to implement 6MLD. It is advisable that firms follow legislative developments in Brussels regarding 6MLD so theycan meet the requirements that new EU legislation will introduce.
Lysis Financial worked with a number of UK based financial institutions to help implement the Money Laundering Regulations 2017 (4MLD). We are preparing ourselves for supporting our clients in implementing the Fifth Money Laundering Directive (5MLD) when it becomes transposed into UK Law.