Changes from plenary report to adopted text

RemovedEXPLANATORY STATEMENT

RemovedSince the EU institutions adopted the 5th Anti-Money Laundering Directive, several consecutive scandals have laid bare severe vulnerabilities of the Union’s financial system. The unfathomable invasion of Ukraine by Russia and subsequent targeted sanctions imposed by governments on Russian oligarchs has made us question how such lenience towards suspicious flows of money has even been possible, for so long. The reform of the EU’s AML framework is, therefore, more topical than ever. The Union must take a much stronger stance towards stopping suspicious flows of money, reflected in our ability to ensure that financial institutions and all kinds of intermediaries duly comply with due diligence and reporting rules, but also that authorities and supervisors have the sufficient tools to make these firms firmly accountable.

RemovedYour co-rapporteurs welcome the AML package, which the EP called for several times, and in particular the proposal for a single rulebook, which is an essential step forward. The choice for an Anti-money Laundering Regulation (AMLR) instead of a Directive is the right response to the fragmented and ineffective regulatory landscape following the adoption of five AML Directives with minimum standards over the last 30 years.

RemovedYour co-rapporteurs welcome the extension of the scope of obliged entities towards all types and categories of crypto-asset service providers. The current discussion about whether persons targeted by recent financial sanctions may be able to circumvent the measures through the crypto-asset industry makes this inclusion all the more relevant.

RemovedAlso the inclusion of crowdfunding service providers as obliged entities is a step forward, however this should concern all crowdfunding service providers operating in Europe, including those regulated by EU rules.

RemovedYour co-rapporteurs further add wealth managers to the list of entities subject to AML/CFT rules, as well as high-level football clubs, agents in the football sector and Member States’ football associations. In 2021, Europol qualified professional sport, and professional football in particular, as prone to the risks of criminal money and money laundering transactions. The Commission has included professional football in its 2019 supra national risk assessment , since whilst it remains a popular sport it is also a global industry with significant economic impact. Questionable sums of money with no apparent or explicable financial return or gain are being invested in the sport. High-level professional football clubs and football associations, as well as sport agents in the football sector, are therefore entities posing high risks and should therefore be added to the list of obliged entities.

RemovedThe risks of ML/FT involving works of art and other high value goods are well known. This is why your co-rapporteurs propose to reduce the value of goods from which due diligence obligations apply from EUR 10 000 to EUR 5 000.

RemovedThe EP considers schemes granting nationality on the basis of a financial investment (CBI schemes), also known as ‘golden passports’, as objectionable from an ethical, legal and economic point of view and pose serious security risks for Union citizens, such as money-laundering and corruption. The co-rapporteurs agree that CBI schemes should be completely banned, and not regulated. However, given the legal uncertainty on this issue, which will only be settled by the European Court, they decided to include CBI schemes in the scope of the regulatory measures. They welcome that the Commission enlisted agents involved in these schemes as obliged entities. However, your co-rapporteurs believe we must go much further to address concerns. Notably, amongst other measures, Member States granting these schemes must ensure that public authorities processing applications carry out specific measures to ensure that such transactions are not misused for AML/TF purposes.

RemovedInternal policies, controls and procedures by obliged entities to mitigate and manage the risks of non-implementation and evasion of targeted financial sanctions are crucial to ensure that they are effective. At the same time, these procedures need to be more proportional. This proportionality principle should therefore be further elaborated by AMLA and the Commission through the adoption of a delegated act, which would be useful for obliged entities which are sole traders, single operators or microenterprises.

RemovedCustomer due diligence (CDD) is a key instrument to detect suspicious activity and prevent ML/TF through a risk-based approach. Your co-rapporteurs believe it is crucial to extend more clearly CDD obligations to crypto-asset occasional transactions and provide specific proposals on this. Furthermore, abilities to bypass the requirements to apply customer due diligence measures and submit suspicious transaction reports should be more clearly specified in the law to prevent abuse. Your co-rapporteurs highlight that legal privilege or professional secrecy play a fundamental role in democratic societies, not just so that lawyers and other legal professionals to defend their clients in court, but also to ensure that citizens and legal entities can seek advice on their position in view of the applicable laws. At the same time, the concept of legal privilege has its limits, as elaborated in the report.

RemovedThe EC proposal on a robust Third Country Policy is appreciated. Further in line with the EPs wish to have an autonomous list and in line with recent developments, your co-rapporteurs propose adding a number of criteria in the assessment of third countries, including alignment with targeted sanctions policy, and also provide for the possibility for the Parliament and the Council to request the Commission an analysis of a specific third country. Furthermore, certain credit or financial institutions established in third countries or crypto asset service providers not established in the EU may also pose a specific and serious threat to the financial system of the Union. Its the co-rapporteurs whish that the Commission is allowed to take action against such institutions and can require the application of concrete enhanced due diligence measures and specific countermeasures against such institutions.

RemovedYour co-rapporteurs extend specific enhanced due diligence measures to crypto-asset transactions, service providers and accounts, and insert a specific prohibition of correspondent relationships with non-compliant crypto-asset service providers. To help obliged entities identify shell banks and non-compliant crypto-asset service providers, your co-rapporteurs introduce a mandate for AMLA to create an indicative and non-exhaustive public register, fed with information provided by other bodies.

RemovedYour co-rapporteurs believe that the list of persons that qualify as PEPs should integrate heads of regional and local authorities, including groupings of municipalities and metropolitan regions, given the large budget that these officials are sometimes responsible for in an executive role, including in public procurement processes. Given the clear proximity with PEPs, siblings should also be added to the definition of family members.

RemovedBusiness relationships and transactions involving high net worth individuals who present one or several factors of higher risk may seriously compromise the integrity of the Union’s financial system and cause serious vulnerabilities to the internal market. The recent revelations on the Pandora Papers and Swiss Secrets have shown that financial institutions are still willing to side-line CDD obligations towards high net worth customers, even when the source of funds and wealth of clients should have raised many red flags. Your co-rapporteurs find this unacceptable, especially when customers deemed high risk, but with lower net wealth, are being subject to de-risking and denied basic financial services due to AML/CFT compliance costs. The co-rapporteurs propose, therefore, mandatory enhanced customer due diligence measures in addition to other measures with respect to high net worth customers, as well as guidelines on de-risking and access to basic financial services, which should be granted to all.

RemovedThe concept of beneficial ownership is crucial to increase transparency of complex corporate structures and ease compliance with AML/CFT rules. In this regard, the beneficial ownership (BO) register is a key instrument to grant sufficient transparency and assist obliged entities in their CDD obligations as well as competent authorities in their tasks. However, to reduce the chances to circumvent this tool, it is important to reduce the percentage threshold that serves as indication of ownership of a legal entity from 25% to 5%.

RemovedAs stressed by the Parliament in the past, business relationships with foreign entities with significant presence in the internal market should trigger an obligation to register the beneficial owner of these entities in the Union. Your co-rapporteurs welcome that the Commission made this proposal, which is particularly relevant for the purchase of real estate. We should no longer allow the purchase of property in the EU by shell companies in tax havens, without any information on their beneficial owner. Your co-rapporteurs propose to extend the obligation to register to already existing business relationships and property owned by foreign entities at the date of application of this Regulation.

RemovedCertain aspects of the implementation of the AML/CFT framework involve the collection, analysis, storage and sharing of data. Your co-rapporteurs fully agree that processing of personal data for the purposes of ML/TF should be done in accordance with fundamental rights as guaranteed by the Charter and, in particular, with the GDPR, on the grounds of public interest. Still, the processing of special categories of data should be subject to stricter rules. Given the risks posed by the processing of such data.

RemovedWhilst fully recognising the importance of the ability to pay in cash, your co-rapporteurs agree with the Commission that large cash payments are an easy way for criminals to launder money, since it is very difficult to detect these transactions. However, in order to be truly effective, your co-rapporteurs believe that the proposed threshold needs to be reduced from EUR 10 000 to EUR 5 000. Moreover, in order to tackle all forms of anonymous ownership instruments, or those which provide for certain degrees of obfuscated ownership, your co-rapporteurs propose the ban of all forms of bearer shares.