What To Expect From EU’s 5th AML Directive?

The EU’s 5th Anti-Money Laundering Directive (5AMLD) will come into force on the 10th of January 2020, and it aims at tightening regulatory controls over more industries, including the crypto one. What will be the impact of the new framework on various industries?

Increasing regulation made the headlines in 2019, and it’s becoming more apparent that regulatory bodies are more and more about cracking down on financial crime. Banks and financial institutions have experienced increased pressure on taking transparency to a new level and eradicate corruption.

The EU member states need to comply with the new directive by the 10th of January 2020 and implement new rules into national laws. Its scope goes further to reach virtual currency exchanges, estate agents, rental intermediaries, art dealers, and custodian wallet providers.

Crypto and corporate industries under the microscope

Among the sectors bracing for impact is the crypto one. Crypto companies will face more scrutiny and stringent controls. The new directive is requiring such businesses to register with authorities in their jurisdiction, increase customer due diligence, and put in place a reporting system for suspicious activity. Additionally, the new rules require Financial Intelligence Units to keep records of personal details of cryptocurrencies buyers.

Ultimate beneficial ownership (UBO) is the new directive’s target as tighter laws aim at discovering financial crime hidden behind complex corporate structures. EU member states are required to collaborate intensively and make national UBO registers available. Bank account details are also included as a requirement, yet only authorities will have access to it.

Also, 5AMLD is targeting not only entities but products as well. Lots of attention is placed on prepaid cards with lowering the limit from €250 to €150, with a €50 online/remote limit applicable. Moreover, only those prepaid cards issues within the Union are valid, unless the jurisdiction issuing them is considered compliant with EU AML standards and procedures.

With stricter laws, many business sectors could experience day-to-day challenges and increased operational efforts to comply with this directive. Corporate and crypto industries are the ones that need to act quick and efficient to keep up and keep legitimacy. C-levels must think long and hard now when outlining plans as more legislative pressure could take a toll on businesses.