Money Laundering News Feature Image
  • EU mandates crypto sector due diligence, closing money laundering loopholes.
  • €10,000 EU-wide cash payment limit to thwart illicit financial transactions.
  • Provisional agreements expand obliged entities and target high-risk sectors.

In a significant stride toward bolstering the EU’s defenses against money laundering and terrorist financing, the Council and Parliament have sealed a provisional agreement on key components of a comprehensive anti-money laundering package. The breakthrough marks a pivotal moment in the establishment of the EU’s robust anti-money laundering system, aiming to safeguard both EU citizens and the financial integrity of the region.

The Belgian Minister of Finance, Vincent Van Peteghem, emphasized the transformative nature of the agreement, stating, “This will ensure that fraudsters, organized crime, and terrorists will have no space left for legitimizing their proceeds through the financial system.”

Under the new package, all regulations pertaining to the private sector will transition to a new regulation, while the directive will focus on organizing institutional Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) systems at the national level within member states.

One of the key provisions of the agreement is the exhaustive harmonization of rules throughout the EU, effectively closing potential loopholes exploited by criminals for laundering illicit proceeds or financing terrorist activities.

The provisional agreement expands the list of “obliged entities” to include sectors crucial to detecting suspicious activities, such as financial institutions, banks, real estate agencies, asset management services, casinos, and now, most notably, the crypto sector. Crypto-asset service providers (CASPs) will be mandated to conduct due diligence on transactions exceeding €1000, applying customer due diligence measures.

Luxury goods traders, including those dealing in precious metals, stones, jewelry, and cultural items, will also become “obliged entities.” The high-risk nature of the football sector is acknowledged, leading to the inclusion of professional football clubs and agents, allowing member states flexibility in removing them from the list based on risk assessment after a longer transition period.

The agreement introduces enhanced due diligence measures for cross-border correspondent relationships involving CASPs. Additionally, credit and financial institutions will undertake enhanced due diligence for business relationships with high-net-worth individuals handling substantial assets, with non-compliance being considered an aggravating factor in the sanctioning regime.

In a bid to curb money laundering, the agreement establishes an EU-wide maximum limit of €10,000 for cash payments. Member states have the flexibility to impose a lower limit if deemed necessary. Furthermore, obliged entities will need to identify and verify the identities of individuals conducting occasional cash transactions between €3,000 and €10,000.

The groundbreaking agreement represents a united effort to fortify the EU’s financial system against illicit activities, demonstrating a commitment to proactive measures and international cooperation in combating money laundering and terrorism financing.

This development is poised to reshape the regulatory landscape, bringing about a more stringent and comprehensive framework to protect the EU’s financial ecosystem and its citizens.