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June 21 2019

Fifth Anti-Money Laundering Directive

On 19 June 2018, the EU published the Fifth Anti-Money Laundering Directive (5MLD) which is aimed at strengthening the EU’s effort to fight money laundering and terrorist financing.

Post-Brexit and until a defined date, EU laws will remain in place and continue to be binding in the UK, therefore plans are in place to transpose 5MLD into national law.  The UK government has issued a consultation paper outlining how it plans to implement 5MLD. All firms within scope are required to ensure compliance by the implementation deadline – 10 January 2020.  

Background

Recent terrorist attacks brought to light emerging new trends which include use of certain modern technologies. These were outside the scope of EU legislation or benefited from regulatory exemptions that were no longer justifiable. As a result, 5MLD widens the scope of firms which are supervised or regulated for anti-money laundering (AML) / counter-terrorist financing (CTF) purposes. In addition, measures taken by regulated firms to mitigate against money laundering and terrorist financing have been expanded. 

What new firms are now within the scope of 5MLD?

Tax specialists

The previous directive only covered auditors, external accountants, and tax advisors, but 5MLD now covers any person that provides material aid, assistance or tax advice to their principal business or professional activity.

Letting agents

Estate agents were covered under the previous directive and lettings agents were only within scope if they performed estate agency activities. Letting agents’ services, where the value of the transaction is equivalent to or above EUR 10,000, are now within the scope of 5MLD.  Through the consultation, the government aims to establish whether the EUR 10,000 threshold amount should be lowered. It also considered the most suitable supervisor for these letting agents. 

Crypto-asset service providers

Providers engaged in exchange services between crypto-assets and fiat currencies, therefore, custodian wallet providers are now within the scope of 5MLD. The government needs to establish a final definition of crypto-assets and select a supervisory body which is likely to be the FCA.  

Art intermediaries

High-value dealers under the previous directive included art intermediaries who traded or auctioned goods worth at least EUR 10,000 in cash. The definition has now been expanded to include payments at or above the threshold regardless of whether they are made in cash. The final definition of an “art intermediary”, the point at which Customer Due Diligence (CDD) will need to be carried out and the relevant supervisor will be established after the consultation.

For more information on the check required for compliance to AML see our identity check and Fraud checks pages on our website.