The dust has not yet settled down on the 5th AML Directive, that the 6th AML Directive (6AMLD) is on the horizon. EU Member States shall transpose such by not later than December, 2020 and entities will have until June 2021 to align themselves with the requirements.
What will change with the introduction of the 6th AML Directive?
Crucially the 6AMLD shall introduce for all its Member States a harmonised definition of what constitutes a money laundering offence. The aim of such is to remove any existing loopholes of interpretation between the distinct Member States domestic legislation.
Furthermore, the 6AMLD shall introduce twenty-two predicate offences which shall include cybercrime as well as environmental crimes. The introduction of such crimes shows that the EU is becoming sensitive to the ever-complex topic of safeguarding our natural habitats and physical environment, whilst also accepting the fact that cybersecurity is a matter of national importance if not national security. In fact cybersecurity has been given quite a lot of prominence by local (Maltese) government and authorities with further initiatives being rolled out in the months to come.
The 6AMLD shall introduce greater obligations on subject persons and firms. Staff will need to be adequately trained to recognise possible indicators of money laundering, especially but not limited to those outlined in Article 2 to the Directive.
The 6AMLD is looking to extend criminal liability to companies and organisations, where responsible persons within such entities (directors, decision takers and those acting for and on behalf of the company or organisation) shall be subject to criminal liability.
This means that legal entities as well as individuals can be subject to punishment where such have failed to take action to prevent such criminal activity by one or more individuals operating within the company. The 6AMLD tough stance can be seen by the fact that even if criminal activity which generated illicit proceeds / funds cannot be identified, individuals or legal persons can be convicted.
Sentences for AML offences will also increase. Minimum sentencing will be of four (4) years which is “without prejudice to the individualisation and application of penalties and the execution of sentences in accordance with the concrete circumstances in each individual case. Member States shall also provide for additional sanctions or measures, such as fines, temporary or permanent exclusion from access to public funding, including tender procedures, grants and concessions, temporary disqualifications from the practice of commercial activities or temporary bans on running for elected or public office.”
A court of law at its discretion may decide to impose additional punitive measures, or else reduce such when taking into a holistic account all the conditions of a specific situation.
Moreover, the 6AMLD introduces new investigative tools and rules for the determination of jurisdictional responsibility by Member States when an offence falls within the jurisdiction of more than one Member State. Factors such as the territory of the Member State on which the offence was committed, the nationality or residency of the offender, the country of origin of the victim or victims, and the territory on which the offender was found – are all to be taken into account when deciding the jurisdiction.
The Directive also introduces the requirement for a money laundering offence to be treated as unlawful in the jurisdiction, where the offence takes place as well as in which the offence has been committed.
Whilst 2021 seems to be a distance reality, in actual fact it is only twenty-four (24) months away. Companies and individuals alike need to start analysing their existing policies, processes, procedures and training to determine what changes are necessary from an operational, cultural and procedural aspect. Staff awareness and understanding shall also be key in ensuring that subject persons are up to speed in understanding the signs of a money laundering offence and what action needs to be undertaken to safeguard not only their reputation but also that of their organisation.
Likewise, directors and shareholders of subject persons, need to ensure that the organisation and members of staff are well equipped to undertake all necessary checks and have sufficient understanding to be able to prove beyond reasonable doubt that all possible actions have been taken to prevent or report an actual or potential money laundering offence.
About the Author
This article has been authored by Nicholas Warren.