The purpose of this guide is to summarise the key changes as a result of 5MLD and to support compliance teams in understanding the impact changes in money laundering regulation have on their compliance requirements.
The 5th money laundering directive, or 5MLD for short, is a European Union directive designed to prevent the use of the financial system for the purposes of money laundering or terrorist financing.
The 5th Money Laundering Directive was implemented on 10th January 2020 and is now known as: The Money Laundering and Terrorist Financing (Amendment) Regulations 2019. The transposition of this EU directive has resulted in amendments to the existing Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. Compliance teams and those who carry out regulated work need to understand the impact of these money laundering regulation changes on their anti-money laundering compliance requirements.
As the financial landscape evolves, new channels and new financial products open up new opportunities for business and consumers, but also for financial criminals. As such, the Financial Action Task Force (FATF) has provided further guidance in a number of areas to tighten money laundering regulations and terrorist financing.
Reflecting this, the EU launched the 5MLD, adopted by the European Parliament in April 2018, hot on the heels of the 4th Money Laundering Directive. Member states are expected to integrate 5MLD into individual country AML and CFT regulations from January 2020.
The additional requirements in 5MLD have been, in part, driven by recent events:
The 4th Money Laundering Directive was adopted by the UK in the 2017 Money Laundering Regulations and reflected in the amended Joint Money Laundering Steering Group (JMLSG) guidance.
Key changes included:
4MLD also mandated other changes, particularly in relation to record keeping and reducing limits on transaction values to trigger CDD.
The requirements of 4MLD have been retained in the 2017 Money Laundering regulations with the newly-updated regulatory amendments being added in accordance with 5MLD to form The Money Laundering and Terrorist Financing (Amendment) Regulations 2019.
Extension of sectors that are now ‘obliged entities’ and in scope of the updated money laundering regulations
Politically Exposed Persons
Customer Due Diligence in onboarding
Enhanced Due Diligence
FIUs and Information Sharing
LexisNexis® Risk Solutions provides a comprehensive range of products and services that can assist firms in every area of the typical KYC/AML compliance workflow, including initial customer onboarding, customer screening for sanctions, PEPs and adverse media, alert remediation, enhanced due diligence and ongoing monitoring.