Changes from plenary report to adopted text

RemovedDRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

AddedP9_TA(2024)0365

Removedon the proposal for a regulation of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing

AddedAnti-Money Laundering Regulation

Removed(COM(2021)0420 – C90339/2021 – 2021/0239(COD))

AddedCommittee on Economic and Monetary Affairs, Committee on Civil Liberties, Justice and Home Affairs

AddedPE719.945

AddedEuropean Parliament legislative resolution of 24 April 2024 on the proposal for a regulation of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (COM(2021)0420 – C9-0339/2021 – 2021/0239(COD))

▸5 unchanged paragraphs

(Ordinary legislative procedure: first reading)

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(2021)0420),

– having regard to Article 294(2) and Article 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C90339/2021),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

Changed– having regard to the opinion of the European Central Bank of 1716 February 2022,

– having regard to the opinion of the European Economic and Social Committee of 8 December 2021,

Removed– having regard to Rule 59 and 40 of its Rules of Procedure,

Added– having regard to the provisional agreement approved by the committees responsible under Rule 74(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 14 February 2024 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

Added– having regard to Rule 59 of its Rules of Procedure,

Added– having regard to the joint deliberations of the Committee on Economic and Monetary Affairs and the Committee on Civil Liberties, Justice and Home Affairs under Rule 58 of the Rules of Procedure,

▸4 unchanged paragraphs

– having regard to the report of the Committee on Economic and Monetary Affairs and the Committee on Civil Liberties, Justice and Home Affairs (A9-0151/2023),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Change 1

RemovedRecital 1: (1) Directive (EU) 2015/849 of the European Parliament and of the Council23 constitutes the main legal instrument for the prevention of the use of the Union financial system for the purposes of money laundering and terrorist financing. That Directive sets out a comprehensive legal framework, which Directive (EU) 2018/843 of the European Parliament and the Council24 further strengthened by addressing emerging risks and increasing transparency of beneficial ownership. Notwithstanding the achievements of Directive (EU) 2015/849, divergent practices regarding its enforcement and the lack of correct implementation of minimum standards have led to a fragmented, incomplete and partially inefficient regulatory framework in the Union. Therefore, experience has shown that further improvements should be introduced to adequately mitigate risks, tackle divergences regarding its enforcement and implementation and to effectively detect criminal attempts to misuse the Union financial system for criminal purposes.

AddedP9_TC1-COD(2021)0239

RemovedRecital 2: (2) The main challenge identified in respect to the application of the provisions of Directive (EU) 2015/849 laying down obligations for private sector actors, the so-called obliged entities, is the lack of direct applicability of those rules and a fragmentation of the approach along national lines. Whereas those rules have existed and evolved over three decades, as a rule they are still implemented in a manner not fully consistent with the requirements of an integrated internal market. Therefore, it is necessary that rules on matters currently covered in Directive (EU) 2015/849 which may be directly applicable by the obliged entities concerned are addressed in this Regulation in order to achieve the desired uniformity of application.

AddedPosition of the European Parliament adopted at first reading on 24 April 2024 with a view to the adoption of Regulation (EU) 2024/… of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing

RemovedRecital 2 a (new): (2a) In the current unstable situation of increased security threats, the Union legal framework for combating money laundering and terrorist financing should be strengthened and harmonised so as to close existing gaps and tighten up current regulations in order to hinder criminal activity in that area.

Added(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Regulation (EU) 2024/1624.)

RemovedRecital 2 b (new): (2b) The illegal, unprovoked and unjustified military aggression against Ukraine has been strongly condemned by the Union and has led it to impose a severe embargo on Russian banks and oligarchs, while also highlighting schemes whereby money is laundered by Russian banks through Union banks services. It is important in that regard to recognise the potential that the long-term maintenance of sanctions has to reduce the risk of Russian money laundering in the Union.

RemovedRecital 3 a (new): (3a) The United Nations Office of Drugs and Crime (UNODC) estimates that between 2 and 5 % of global gross domestic product (GDP) is laundered each year. In addition, it is estimated that about 1,5% of the Union's GDP is subject to money laundering and only about 1 % of the money is ultimately confiscated1a. Therefore, it is essential that Member States, in addition to reinforcing the prevention of money laundering and terrorist financing, devote substantial efforts to recover ill-gotten money. / 1a https://eur-lex.europa.eu/legal-content/FR/TXT/?uri=CELEX%3A52021SC0190

RemovedRecital 5: (5) Since the adoption of Directive (EU) 2015/849, recent developments in the Union’s criminal law framework have contributed to strengthening the prevention and fight against money laundering, its predicate offences and terrorist financing. Directive (EU) 2018/1673 of the European Parliament and of the Council 25 has led to a common understanding of the money laundering crime and its predicate offences. Directive (EU) 2017/1371 of the European Parliament and of the Council 26 defined financial crimes affecting the Union’s financial interest, which should also be considered predicate offences to money laundering. Directive (EU) 2017/541 of the European Parliament and of the Council 27 has achieved a common understanding of the crime of terrorist financing. As those concepts are now clarified in Union criminal law, it is no longer needed for the Union’s AML/CFT rules to define money laundering, its predicate offences or terrorist financing. Instead, the Union’s AML/CFT framework should be fully coherent with the Union’s criminal law framework with the aim of improving public safety and protecting Union citizens.

RemovedRecital 6: (6) Technology keeps evolving, offering opportunities to the private sector to develop new products and systems to exchange funds or value. While this is a positive phenomenon, it may generate new money laundering and terrorist financing risks, as criminals continuously manage to find ways to exploit vulnerabilities in order to hide and move illicit funds around the world. Crypto-assets service providers, non-fungible token (NFT) platforms and crowdfunding platforms are exposed to the misuse of new channels for the movement of illicit money and are well placed to detect such movements and mitigate risks. The scope of Union legislation should therefore be expanded to cover these entities, in line with the recent developments in Financial Action Task Force (FATF) standards in relation to crypto-assets. NFT platforms are not covered by the current definition of crypto-assets service providers under Regulation (EU) 2023/... [the MiCA Regulation] because they do not provide services in crypto-assets that are fungible and non unique. In order to close that gap and mitigate the associated risks of money laundering and terrorist financing, NFT platforms should therefore be included in the horizontal AML/CFT framework as a separate category of obliged entities.

RemovedRecital 6 a (new): (6a) Decentralised Autonomous Organisations (DAO) and other Decentralised Finance (DeFi) arrangements should also be subject to Union AML/CFT rules to the extent they perform or provide, for or on behalf of another person, crypto-asset services which are controlled directly or indirectly, including through smart contracts or voting protocols, by identifiable natural and legal persons. In such cases, DAO or DeFi arrangements should be considered to be crypto-asset service providers falling within the scope of Regulation (EU) 2023/... [please insert reference – proposal for a Regulation on Markets in Crypto-assets, and amending Directive (EU) 2019/1937 - COM/2020/593 final] and this Regulation, regardless of the commercial label or their self-identification as DAO or DeFi. Developers, owners or operators which fall within the scope of this Regulation should assess the risks of money laundering and terrorist financing before launching or using a software or platform and should take appropriate measures in order to mitigate the risks of money laundering and terrorist financing on an ongoing and forward-looking manner.

RemovedRecital 6 b (new): (6b) The virtual world offers new opportunities for criminals to hide and channel illicit funds by exploiting it to purchase and resell virtual items, such as virtual real estate, virtual lands and other high-demand goods. While there is currently no specific regulatory framework for the metaverse as the adoption of the metaverse expands and evolves, the risks of money laundering, terrorist financing and sanctions evasion substantially increase. Obliged entities should be aware of such risks and continue to comply with AML/CFT obligations when operating in virtual worlds, in relation to the activities and operations covered by this Regulation, such as legal professionals with experience in real estate, finance and intellectual property, which may get increasingly involved in such transactions, including when providing legal assistance or advice.

RemovedRecital 9: (9) This Regulation does not aim to regulate independent legal and tax professions, which take different forms across Member States, or to interfere with the essence of the role of defence of such professionals in the administration of justice and the rule of law, which underpins legal professional privilege. However, independent legal professionals, auditors, external accountants and tax advisors, who, in some Member States, are entitled to defend or represent a client in the context of judicial proceedings or to ascertain a client's legal position, also perform activities that are remote from the role of defence. Therefore, they should be subject to this Regulation when participating in financial or corporate transactions, including when providing tax advice or advice relating to citizenship or residence by investment schemes, where there is the risk of the services provided by those legal professionals being misused for the purpose of laundering the proceeds of criminal activity or for the purpose of terrorist financing. There should, however, be exemptions from any obligation to report information obtained before, during or after judicial proceedings which should be covered by the legal privilege. Exemptions should also be provided for activities performed in the course of ascertaining the legal position of a client, which should also be covered by the legal privilege to the strict extent that such activities aim at establishing the rights and obligations of clients, in c…

RemovedRecital 10: (10) In order to ensure respect for the rights guaranteed by the Charter of Fundamental Rights of the European Union (the ‘Charter’), in the case of auditors, external accountants and tax advisors, who, in some Member States, are entitled to defend or represent a client in the context of judicial proceedings or to ascertain a client's legal position, the information they obtain in the performance of those tasks should not be subject to reporting obligations, except where the auditors, external accountants or tax advisors are taking part in money laundering or terrorist financing, the legal advice, is provided for the purposes of money laundering or terrorist financing, or where the auditor, external accountant or tax advisor knows has a well-grounded suspicion, on the basis of factual and objective circumstances, that the client is seeking legal advice, including in relation to tax matters or citizenship or residence by investment schemes, for the purposes of money laundering or terrorist financing and the legal advice sought is not connected to judicial proceedings. Member States should be able to adopt or maintain with regard to specific transactions that involve a particularly high risk of money laundering or terrorist financing additional reporting obligations to which the exemption from the requirements to transmit information does not apply. For that purpose, it should be possible for Member States to introduce specific provisions in national law on the application of t…

RemovedRecital 12: (12) Crowdfunding platforms’ vulnerabilities to money laundering and terrorist financing risks are horizontal and affect the internal market as a whole. To date, diverging approaches have emerged across Member States as to the management of those risks. While Regulation (EU) 2020/1503 of the European Parliament and of the Council 28 harmonises the regulatory approach for business investment and lending-based crowdfunding platforms across the Union and sets up some AML/CFT requirements limited to due diligence of crowdfunding platforms in respect of project owners and within authorisation procedures, the lack of an harmonised legal framework with robust AML/CFT obligations for crowdfunding platforms creates gaps and weakens the Union AML/CFT safeguards. It is therefore necessary to ensure that all crowdfunding platforms, including those already licensed under Regulation (EU) 2020/1503, are subject to Union AML/CFT legislation.

RemovedRecital 13: deleted

RemovedRecital 15: (15) Persons trading in precious metals and stones as well as luxury goods are particularly exposed to very significant money laundering risks, regardless of the means of payment. Criminal organisations have repeatedly used that method, which is easily accessible and does not require specific expertise, to convert criminal proceeds into goods that are in high demand in foreign markets. For this reason, persons dealing in precious metals and precious stones and luxury goods should be subject to AML/CFT requirements.

RemovedRecital 16: (16) Investment migration operators are private companies, bodies or persons acting or interacting directly with the competent authorities of the Member States on behalf of third-country nationals or providing intermediary services to third-country nationals seeking to obtain residence rights in a Member State in exchange of any kind of investments, including capital transfers, purchase or renting of property, investment in government bonds, investment in corporate entities, donation or endowment of an activity contributing to the public good and contributions to the state budget. Investor residence and citizenship schemes present risks and vulnerabilities in relation to money laundering, corruption and tax evasion. Such risks are exacerbated by the cross-border rights associated with residence in a Member State. Therefore, it is necessary that investment migration operators are subject to AML/CFT obligations. In view of the risks and vulnerabilities presented by investor schemes, which result in the acquisition of either residence rights or nationality in exchange for such investments, it is necessary to provide for a ban on citizenship by investment schemes and for minimum requirements in the assessment of applicants by Member States’ public authorities with regards to residence by investment schemes, to ensure that enhanced due diligence measures are applied with regard to applicants and to ensure that nationals from certain countries with AML/CFT-related risks identified …

RemovedRecital 18 a (new): (18a) According to a report from the FATF of July 2009 entitled ‘Money Laundering through the Football Sector’, “the professional football market has undergone an accentuated growth due to a process of commercialisation. Money invested in football surged mainly as a result from increases in television rights and corporate sponsorship. Simultaneously, the labour market for professional football players has experienced unprecedented globalisation – with more and more football players contracted by teams outside their country and transfer payments of astounding dimensions. The cross border money flows that are involved may largely fall outside the control of national and supranational football organisations, giving opportunities to move and launder money. At the same time money from private investors is pouring into football clubs to keep them operating and can give the investor long term returns in terms of media rights, ticket sales, proceeds of sales of players and merchandising.” In its report of 24 July 2019 to the European Parliament and the Council on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities, the Commission assessed professional football and stated that “whilst it remains a popular sport it is also a global industry with significant economic impact. Professional football’s complex organisation and lack of transparency have created fertile ground for the use of illegal resou…

RemovedRecital 19: (19) It is important that AML/CFT requirements apply in a proportionate manner and that the imposition of any requirement is proportionate to the role that obliged entities can play in the prevention of money laundering and terrorist financing. To this end, it should be possible for Member States in line with the risk-based approach of this Regulation to exempt certain operators from AML/CFT requirements, where the activities they perform present low money laundering and terrorist financing risks and where the activities are limited in nature. To ensure transparent and consistent application of such exemptions across the Union, a mechanism should be put in place allowing the Commission to verify the necessity of the exemptions to be granted. The Commission should also publish such exemptions on a yearly basis in the Official Journal of the European Union.

RemovedRecital 20: (20) A consistent set of rules on internal systems and controls that applies to all obliged entities operating in the internal market will strengthen AML/CFT compliance and make supervision more effective. In order to ensure adequate mitigation of money laundering and terrorist financing risks, obliged entities should have in place an internal control framework consisting of risk–based policies, controls and procedures and clear division of responsibilities throughout the organisation. In line with the risk-based approach of this Regulation, those policies, controls and procedures should be proportionate to the nature, activity and size of the obliged entity and respond to the risks of money laundering and terrorist financing that the entity faces.

RemovedRecital 23: (23) The FATF has developed standards for jurisdictions to identify, and assess the risks of potential non-implementation or evasion of the targeted financial sanctions related to proliferation financing, and to take action to mitigate those risks. Those new standards introduced by the FATF today do not substitute nor undermine the existing strict requirements for countries to implement targeted financial sanctions to comply with the relevant United Nations Security Council Regulations relating to the prevention, suppression and disruption of proliferation of weapons of mass destruction and its financing. Those existing obligations, as implemented at Union level by Council Decisions 2010/413/CFSP31 and (CFSP) 2016/84932 as well as by Council Regulations (EU) No 267/201233 and (EU) 2017/150934, remain strict rule-based obligations binding on all natural and legal persons within the Union. The same approach should apply with regard to other targeted financial sanctions including targeted financial sanctions relating to terrorism and terrorist financing.

RemovedRecital 23 a (new): (23a) Union legislation does not include provisions that describe the systems and controls that credit and financial institutions should have to have in place in order to comply with targeted financial sanctions obligations. In its report on the future EU AML/CFT framework, the European Supervisory Authority (European Banking Authority) (EBA), established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council, noted that, in situations where the legislation provides for exemptions from certain AML/CFT requirements, such as in relation to occasional transactions, there is an apparent conflict between risk-based exemptions and the absolute requirement to comply with applicable sanctions regimes, which is an obligation of result. EBA also found that there are different interpretations across Member States on the obligations on payment service providers to screen the payer or the payee against sanctions lists. That situation could create regulatory arbitrage and gaps which could weaken the Union targeted financial sanctions regime. It is therefore necessary to establish common standards on the measures that credit and financial institutions should take in order to comply with their financial sanctions obligations.

RemovedRecital 24: (24) In order to reflect the latest developments at international level, a requirement has been introduced by this Regulation to identify, understand, manage and mitigate risks of potential non-implementation, divergent implementation or evasion of all targeted financial sanctions including targeted financial sanctions relating to terrorism and terrorist financing and proliferation financing-related targeted financial sanctions at obliged entity level.

RemovedRecital 24 a (new): (24a) Sanctions adopted by the United Nations are relevant risk factors for money laundering, predicate offences and terrorist financing since they aim to address threats of terrorism and terrorist financing, crimes related to human rights violations and proliferation of nuclear weapon of mass destruction. Therefore, appropriate risk-mitigating measures need to be taken in high-risk situations in that regard, without prejudice to the application of rule-based obligations imposed under the Union targeted financial sanctions regime;

RemovedRecital 25: (25) It is important that obliged entities take all measures at the level of their management to implement internal policies, controls and procedures and to implement AML/CFT requirements. While a person at management level should be identified as being responsible for implementing the obliged entity’s policies, controls and procedures, the responsibility for the compliance with AML/CFT requirements should rest ultimately with the management body of the entity. Tasks pertaining to the day-to-day implementation of the obliged entity’s AML/CFT policies, controls and procedures should be entrusted to a compliance officer.

RemovedRecital 27 a (new): (27a) Obliged entities might employ staff who by virtue of their professional activities could qualify as obliged entities themselves. As the AML/CFT framework is based on the role of firms or sole practitioners as gatekeepers of the financial system, it does not aim to target such employees. In order to facilitate the implementation of this Regulation, it is appropriate to clarify the situation of employees such as in-house lawyers, who should not be subject to the requirements of this Regulation when performing their function as employees of obliged entities.

RemovedRecital 27 b (new): (27b) Given that AML/CFT requirements are applicable to a wide range of obliged entities in both nature and size, AMLA should have the task of developing draft regulatory technical standards concerning minimum requirements and standards by obliged entities which are sole traders, single operators or microenterprises taking due account of the principle of proportionality and alleviation of administrative and financial burden.

RemovedRecital 28: (28) The consistent implementation of group-wide AML/CFT policies and procedures is key to the robust and effective management of money laundering and terrorist financing risks within the group. To this end, group-wide policies, controls and procedures should be adopted and implemented by the parent undertaking. Obliged entities within the group should be required to exchange information when such sharing is relevant for preventing money laundering and terrorist financing. Information sharing should be subject to sufficient guarantees in terms of confidentiality, data protection and use of information. AMLA should have the task of drawing up draft regulatory standards specifying the minimum requirements of group-wide procedures and policies, including minimum standards for information sharing within the group and the role and responsibilities of parent undertakings that are not themselves obliged entities, and taking into account the principle of proportionality.

RemovedRecital 29: (29) In addition to groups, other structures exist, such as networks or partnerships, in which obliged entities might share common ownership, management and compliance controls. To ensure a level playing field across the sectors whilst avoiding overburdening it, AMLA should identify those situations where similar group-wide policies should apply to those structures, taking into account the principle of proportionality.

RemovedRecital 30: (30) There are circumstances where branches and subsidiaries of obliged entities are located in third countries where the minimum AML/CFT requirements, including data protection obligations, are less strict than the Union AML/CFT framework. In such situations, and in order to fully prevent the use of the Union financial system for the purposes of money laundering and terrorist financing and to ensure the highest standard of protection for personal data of Union citizens, those branches and subsidiaries should comply with AML/CFT requirements laid down at Union level. Where the law of a third country does not permit compliance with those requirements, for example because of limitations to the group's ability to access, process or exchange information due to an insufficient level of data protection or banking secrecy law in the third country, obliged entities should take additional measures to ensure the branches and subsidiaries located in that country effectively handle the risks. AMLA should be tasked with developing draft technical standards specifying the type of such additional measures, taking into account the principle of proportionality.

RemovedRecital 32 a (new): (32a) Credit and financial institutions should ensure that the application of due diligence measures is carried out on the basis of an individual risk assessment and does not result in unduly denying legitimate customers access to financial services, in particular with regard to specific categories of individual customers associated with higher risk, such as refugees and asylum seekers as well as human rights defenders, and non-governmental organisations and their representatives and associates. To that end, credit and financial institutions should ensure that their internal policies, controls and procedures are commensurate to the risks identified and do not unduly undermine financial inclusion. Access to basic financial products and services allows refugees and people seeking temporary or international protection to participate in the economic and social life of the Union, in line with the right to protection enshrined in Article 18 of the Charter of Fundamental Rights. At the same time, financial inclusion avoids transactions being driven underground through informal channels, thereby making the detection and reporting of suspicious transactions more difficult. Therefore, financial inclusion contributes significantly to the fight against money laundering and terrorist financing. This Regulation provides sufficient flexibility to financial institutions to perform the identification and verification of prospective clients who are refugees or seek protection and to adopt, in …

RemovedRecital 32 b (new): (32b) Obliged entities should take appropriate measures to verify the identity of the beneficial owners of their customers in order to know who the beneficial owner is and understand the ownership and control structure of the customer. When verifying a beneficial owner’s identity, obliged entities should determine the extent and frequency of additional information consulted on a risk-basis. To that end, they should consult the necessary information, documents and data from the customer or reliable and independent sources, such as business registers or other relevant corporate documents, and should also consult beneficial owners registers as provided for in Article 10 of Directive (EU) ,,,/,,, [please insert reference – proposal for 6th Anti-Money Laundering Directive - COM/2021/423 final]. When verifying a person’s identity, the robustness of the evidence provided and the risk of identity theft must be considered. It is therefore important that, when obliged entities suspect that the beneficial ownership information declared by the customer is false or that the proof of identity provided is falsified or stolen, or where there is any related risk that the identity of the beneficial owner may not coincide with the documentation provided, they should take steps to check whether the claimed identity reasonably belongs to the person declared by the customer and whether those persons actually are the beneficial owners of the legal entity or arrangement.

RemovedRecital 33: (33) Obliged entities should not be required to apply due diligence measures on customers carrying out occasional or linked transactions below a certain value, unless there is suspicion of money laundering or terrorist financing. Whereas the EUR 10 000 threshold applies to most occasional transactions, obliged entities which operate in sectors or carry out transactions that present a higher risk of money laundering and terrorist financing should be required to apply customer due diligence for transactions with lower thresholds, and should, in particular, verify whether those thresholds are met within linked transactions with lower amounts. To identify the sectors or transactions as well as the adequate thresholds for those sectors or transactions, AMLA should develop dedicated draft regulatory technical standards.

RemovedRecital 33 a (new): (33a) Business relationships are defined in this Regulation and refer to business, professional or commercial relationships connected with the professional activities of an obliged entity. They are expected, at the time when the contact is established, to have an element of duration. In the case of real estate transactions, for entities other than credit and financial institutions, a business relationship means the provision of services which involve the sale or brokerage of more than one property over a period of time. A sale also includes the services of notaries or lawyers where such services are required under national law in order to conduct the transactions or transfer of immovable property.

RemovedRecital 34: (34) Some business models are based on the obliged entity having a business relationship with a merchant for offering payment initiation services through which the merchant gets paid for the provision of goods or services, and not with the merchant’s customer, who authorises the payment initiation service to initiate a single or one-off transaction or several transactions to the merchant. In such a business model, the obliged entity’s customer for the purpose of AML/CFT rules is the merchant, and not the merchant’s customer. Therefore, customer due diligence obligations should be applied by the obliged entity only vis-a-vis the merchant. If the same obliged entity also provides payment services to the merchant, which brings it into the possession of funds, then the obliged entity’s customer is also the merchant as regards the combined offering of payment initiation services, account information services and payment services.

RemovedRecital 40: (40) To ensure the effectiveness of the AML/CFT framework, obliged entities should regularly review the information obtained from their customers, in accordance with the risk-based approach. This does not mean that the obliged entity should repeatedly identify and verify the identity of each customer every time that a customer conducts a transaction. An obliged entity should be able to rely on the identification and verification steps that it has already undertaken in low risk situations, provided that there is no suspicion of money laundering or terrorist financing, or no reasonable doubt that the information is no longer accurate and up to date and provided that there is no material change in the way that the customer’s account is operated, which is not consistent with the customer’s business profile. Obliged entities should also set up a monitoring system to detect atypical transactions that might raise money laundering or terrorist financing suspicions. To ensure the effectiveness of the transaction monitoring, obliged entities’ monitoring activity should in principle cover all services and products offered to customers and all transactions which are carried out on behalf of the costumer or offered to the customer by the obliged entity. However, not all transactions need to be scrutinised individually. The intensity of the monitoring should respect the risk-based approach and be designed around precise and relevant criteria, taking account, in particular, of the character…