AML

On 12 November 2018, approximately 6 months after the adoption of the 5th EU Anti-Money Laundering Directive (5AMLD), the European Parliament published further rules to strengthen the fight against money laundering through the 6th EU Money Laundering Directive (6AMLD).

 

Member States are required to transpose the 6AMLD into national law by 3 December 2020.  After which, relevant regulations must be implemented by firms within Member States by 3 June 2021.

 

 

What can we expect?

There are a number of proposed amendments which regulated firms operating in the European Union (EU) should be aware of. We outline six of the key amendments to look out for below:

1. Unified list of predicate offences

  • The 6AMLD lists 22 specific predicate offences for money laundering which all EU Member States must criminalise. Some of the more interesting offences include environmental offences, cybercrime, and direct and indirect tax offences.
  • EU Member States and regulated firms will need to develop an in-depth understanding of the predicate offences, the relevant risk factors and typologies involved as a first step to implementing the new provisions.

2.  Additional money laundering offences: Aiding and abetting, attempting and inciting

  • The Directive broadens the scope of money laundering offences to include aiding, abetting and attempting to commit an offence of money laundering as a criminal offence.

3.  Extension of criminal liability to legal persons

  • One of the more significant amendments under the Directive is the extension of criminal liability to legal persons (e.g. companies or incorporated partnerships) as well as individuals in certain positions (representatives, decision-makers or those with authority to exercise control) who commit offences for the benefit of their organisation, including where the offence was made possible by the lack of supervision or control of the individual.

4.  Increased international co-operation for prosecution of money laundering

  • Where two Member States each have jurisdiction over the prosecution of an offence, they are required to collaborate and agree to prosecute in a single Member State.
  • There are also other measures for a “more efficient and swifter cross-border cooperation between competent authorities”, as well as requirements for Member States to have “effective investigative tools”.

5.  Tougher punishments

  • The Directive increases the minimum prison sentence for money laundering offences for individuals from one year to four years, alongside a variety of other “dissuasive” sanctions.
  • It also includes punishments for legal persons, including exclusion from public benefits or aid; a temporary or even permanent ban from doing business; compulsory winding-up; and a temporary or permanent closure of establishments used to commit the offence.

6.  Requirement for dual criminality for specified offences

  • The Directive requires Member States to criminalise money laundering arising from six specified predicate offences, even if the conduct constituting those predicate offence was lawful in the jurisdiction in which it was committed.
  • The six specified offences are: participation in an organised criminal group and racketeering; terrorism; trafficking in human beings and migrant smuggling; sexual exploitation (including of children); illicit trafficking in narcotics and psychotropic substances; and corruption.

 

What happens next and what about Brexit?

The UK is currently expected to withdraw from the EU on 29 March 2019, so before the deadline of 3 December 2020 for EU Member States to transpose the 6AMLD into national law. If the UK ratifies the EU-UK Withdrawal agreement, then the UK will enter a transitional period for Brexit which would last beyond the date of implementation. In this case the UK would likely be bound to implement the requirements of the Directive. Even if not bound to do so in a no-deal scenario, it may choose to adopt the Directive to ensure alignment with the block.

The recent stream of anti-money laundering Directives suggests the EU’s appetite for rules to protect the integrity of the financial system and fighting against money laundering is larger than ever.

 

 

Chris

Chris Clements – Partner, Deloitte Forensic, Financial Crime

Chris Clements is a partner in Deloitte’s forensic practice, and has a breadth of experience in international arbitration, expert witness and determination work. Chris has been instructed in over 30 UK High Court and International Arbitration matters under a number of different rules, including LCIA, ICC, JARB, and DIAC and has given expert evidence in international arbitrations in the UK, Canada, India and France, as well as domestic tribunals, adjudications. He has also led a number of high profile accounting investigations that have led to him appearing in front of public committees and in court prosecutions. Chris takes appointments as arbitrator, determiner and mediator. He holds membership at the Expert Witness Institute, the Academy of Experts, the Chartered Institute of Arbitrators, and the Society of Construction Law and has been named as a leading International Arbitration Expert Witness in Who’s Who Legal for 2019.

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Emma

Emma Hardaker – Director, Deloitte Forensic, Financial Crime

Emma has more than 15 years’ experience in anti-financial crime in financial institutions. She has been MLRO for two organisations, including for Deloitte, and has assessed, reviewed and advised on various aspects of the anti-financial crime frameworks for a range of bank and non-bank financial institutions.

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Katie

Katie Jackson – Partner, Deloitte Forensic, Financial Crime

Katie is a Partner in Deloitte Forensic. She has over 10 years’ experience working in the Financial Services sector, principally specialising in Financial Crime. She has a particular focus on anti-money laundering (AML) and financial sanctions, supporting clients to comply with regulatory obligations and keep abreast of industry good practice. More recently, she has been supporting projects looking to redesign financial crime target operating models.

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