By John Horan
Unless you’ve been hiding under a large stone for the last year, you will no doubt have heard about the latest Money Laundering Directive that will replace the old 2007 regulations. The new proposed regulations will aim to help fight money laundering, tax crimes and terrorist financing.
If you work in the identity space however, what has actually changed? Will it affect your current policies and procedures?
• Politically exposure persons
All domestic politically exposed persons (PEPs) and PEPs in international organisations are now included. Additionally the period of relevance has now been extended to 18 months.
• Taxing times
Tax fraud and tax evasion are now specifically mentioned as a predicate offence for money laundering. Although this has been covered in the UK before, this is a first across the EU.
• Due Diligence
With regards customer due diligence, it’s not enough to simply verify your customer, you need to ensure that you monitor the documents and ensure they are kept up to date. With regards gambling, recommendations are made that any wager or winnings of €2,000 or more would trigger an identity and verification check
In addition, data protection concerns have now been recognised as records are kept for 5 years and after that date all personal data to be deleted
• Risky business
The Risk Based Approach has been expanded to state it must have evidence based decision making. Depending on the sector and jurisdiction, the 4MLD stipulates that according to risk, either simplified or enhanced customer due diligence should take place
• Beneficial ownership
There will be more structure around responsibility for subsidiaries and branches and identification of natural persons who are owners of legal persons
When will it all be coming into force?
It is likely that adoption of the new regulations will be at some point this year with the new UK regulations ready to go much later this year.
Will it change my day-to-day business affairs?
Chances are you already have policies and procedures in place to ensure you are compliant with the 3rd Money Laundering Directive so not much will need to change. The requirement to carry out customer due diligence has increased so it will be worth verifying that you have appropriate controls in place.