Anti-Money Laundering and Counter Financial Terrorism

On the 21st day of July 2021, the MFSA distributed a circular with the focal intent to inform Financial Market Participants and all Financial Advisors that on the 20th day of July 2021, the European Commission implemented and embraced a number of ambitious measures in order to further regulate the use of the financial system for the purposes of money laundering and terrorist financing.

The relevant adopted measure consists of mainly four legislative enhancements.

New AML Rule Book

It is being proposed that a new Anti-Money Laundering Rule Book shall be introduced. This book shall precisely and comprehensively define the customer due diligence requirements that must be applied by all relevant entities throughout the internal market.

It shall also provide a harmonised set of rules in relation to the concept of ‘Beneficial Ownership’ and the power and responsibilities of supervisors and Financial Intelligence Units.

The aim of such introduction is to primarily decrease the loopholes within the AML rules within the internal market and create a single-level standard of supervision all throughout the market.

The creation of an AML EU Agency

The AML EU Agency, comprising of high-level and knowledgeable officials, will be established to serve as a direct supervisor on certain specified financial institutions whilst indirectly supervising the other non-specified relevant institutions. The Agency will also be monitoring and coordinating supervisors of non-financial entities.

The Agency will be the central authority at EU level whilst facilitating the cooperation amongst national Financial Intelligence Units.

Sixth Directive on AML/CFT (‘AMLD6’)

Having recently introduced the 5th AML Directive to amend the 4th AML Directive, the Commission has moved on to suggest the introduction of the 6th AML Directive. As it stands, Member States have to institute records or mechanisms to gain and possess data on bank accounts and their owners.

The introduction of the 6th AML Directive would put in place a cross-boarded system whereby Financial Intelligence Units may access information which is held on such records or mechanisms in relation to other Member States.

Naturally, this will enable law enforcement authorities to identify whether an investigated personnel holds any bank accounts in other Member States and hence, simplifies financial investigations and the retrieval of any asset in cross-border cases.

A Regulation on information accompanying transfers of funds and certain crypto-assets

It is being proposed to amend the 2015 EU Regulation on transfers of funds (Regulation 2015/847). Such proposed amendment is to expand the regulation’s scope to the transfer of crypto-assets. Essentially, this would mean that comprehensive information in relation to both the sender and receiver of such transfers will have to be included by the crypto-asset service providers with all transfer of such virtual assets.

The reason behind such proposal is simply to be able to identify the parties to the transfer and to detect any possible suspicious transactions.

Conclusion

Needless to say the MFSA will be assessing and evaluating each and every proposal within such package. Moreover, the MFSA has also made it clear that it will enthusiastically participate in discussions at EU level . The authority will be distributing further circulars in relation to these proposals.

About the Author

This article has been authored by Bjorn Camilleri, CSB Group Junior Advisor. For further information or any assistance with your Risk & Compliance, you may contact one of our experts on [email protected].