Reforms to EU anti-money laundering rules move closer

Out-Law News | 16 Jan 2015 | 4:01 pm | 1 min. read

Reforms to EU anti-money laundering rules are closer to being finalised after formal steps were taken to signal EU ministers' approval of the planned new framework.

The presidency of the Council of Ministers wrote (2-page / 174KB PDF) to the Council's Permanent Representatives Committee (COREPER) asking it to endorse the draft new Anti-Money Laundering Directive (91-page / 697KB PDF).

The Council and European Parliament reached political consensus on the anti-money laundering reforms last month and the endorsement by COREPER is the next step in the process of finalising the new rules. COREPER is due to meet on Thursday to consider the proposals.

The Directive, as drafted, will also need to be endorsed by the Parliament's Economic and Monetary Affairs and Civil Liberties, Justice and Home Affairs committees before a final vote of the Council and Parliament can be taken to approve the new framework.

Under the deal struck by negotiators for the Parliament and Council, businesses would be required to provide information about the ultimate beneficial ownership of their company to new central registers to be operated by EU countries.

The data on the registers would be accessible to regulators and other "competent authorities" without restriction, and banks and other "obliged entities" would also be able to access the information when conducting 'know your customer' (KYC) checks.

In addition, individuals that could demonstrate a "legitimate interest" in the data, such as journalists, could also gain access to the information.

“The obligation placed upon EU member states to maintain central registers listing information on the ultimate beneficial owners of corporate and other legal entities, as well as trusts, will enable greater transparency in financial transactions," financial services litigation and compliance expert Michael Ruck of Pinsent Masons, the law firm behind Out-Law.com, said at the time of the Council and Parliament's provisional agreement. "This will no doubt make it more difficult for transactions to mask money laundering activity."

"This obligation will also make it easier for regulators and prosecutors to identify potential wrongdoing and to identify those businesses who are either intentionally or unknowingly caught up in illicit activity. Certain financial services firms will have access to a wider range of information in order to conduct customer due diligence and there is no doubt that they will have to ensure they take full advantage of this to avoid the wrath of regulators for failing to take appropriate steps to prevent financial crime," he said.