EU enacts groundbreaking reforms in AML/CFT Regulations and Directives

In a decisive move to bolster its fight against money laundering and terrorist financing (ML/TF), the European Union (EU) has published a comprehensive suite of new regulations and directives in its Official Journal on June 19, 2024. These reforms mark a significant overhaul of the EU’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework, reflecting the Union’s commitment to enhancing financial integrity and security across its member states.

The following list provides the new regulations and directives adopted by the European Parliament and Council:

• Regulation (EU) 2024/1620 establishing the Authority for AML/CFT;
• Regulation (EU) 2024/1624 on the prevention of the use of the financial system for the purposes of ML/TF;
• Directive (EU) 2024/1640 on the mechanisms to be put in place by Member States for the prevention of the use of the financial system for the purposes of ML/TF – AMLD6;
• Directive (EU) 2024/1654 as regards access by competent authorities to centralised bank account registries through the interconnection system and technical measure to facilitate the use of transaction records.

Key Highlights of the Reforms include:

• Establishment of a Centralized Authority: A new EU Anti-Money Laundering Authority (AMLA) is established to oversee compliance and enforcement, ensuring uniform application of AML/CFT measures across all member states.
• Enhanced Due Diligence Requirements: Financial institutions will now face stricter due diligence obligations, including more rigorous verification processes and ongoing monitoring of high-risk customers and transactions.
• Improved Information Sharing: The reforms facilitate greater cooperation and information exchange between national authorities and financial institutions, streamlining the detection and prevention of illicit financial activities.
• Expanded Scope of Regulation: The updated directives extend AML/CFT obligations to a broader range of entities, including cryptocurrency service providers, real estate agents, and high-value goods dealers.
• Harmonized Penalties: Uniform penalty structures are introduced to ensure consistent enforcement across the EU, deterring non-compliance and reinforcing the integrity of the financial system.

The implementation of these reforms will be closely monitored, with the AMLA expected to play a crucial role in guiding member states through the transition. Financial institutions and affected entities are advised to begin preparations to comply with the new requirements, which are set to take effect twenty days after their publication in the EU’s Official Journal.

The European Union’s renewed commitment to AML/CFT reflects its proactive stance in safeguarding the financial system from evolving threats. These measures are poised to enhance the resilience and transparency of the EU’s financial sector, contributing to a safer and more secure economic environment.

Contact us at info@salvusfunds.com if you have any questions or require support with your AML regulatory requirements; our Regulatory Compliance team is ready to help.  

#StayAhead