The new directive is the sixth of the EU’s AML laws, the first of which was brought into force in 1991. This latest iteration introduces a number of important changes that businesses will have to consider.
What is changing?
The main changes involve a widening of the scope of liability for money laundering offences, including introducing the offence of aiding and abetting money laundering and extending the liability from “natural persons” to “legal persons”. This means that corporate entities or businesses may be held liable for committing an offence under the directive.
In addition, the directive harmonises member states’ laws by introducing 22 “predicate offences”, two of which are relatively new to EU law – cybercrime and environmental crime.
In summary, 6AMLD’s rules are stricter and more far-reaching than previous directives. For example, under the previous directives only individuals who benefited directly from money laundering or committed the crime itself could be prosecuted. The EU has decided to cast its net much wider with the introduction of 6AMLD, and therefore the risk of being heavily sanctioned or prosecuted has increased.
As with all EU directives, there is a staggered approach to full implementation. In particular, the following are some key dates for your diary over the coming months and years.
Deadline for Transposition into National Laws: December 2020
Member states are expected to have implemented the directive into their national legal frameworks by the 3rd of December 2020. Unlike EU Regulations, Directives are not directly applicable without implementation at a national level, so there is room for a certain degree of divergence when implemented by the various member states.
In this respect, it’s important that impacted firms and businesses understand the exact requirements and legal nuances of each country in which they are conducting business.
Implementation Deadline: June 2021
Businesses must have implemented the 6AMLD by the 3rd of June 2021. This is a very important date if you are an “obligated” business, as by this point you should be confident that you are in compliance with the directive. Carrying out an “enterprise-wide risk assessment”, updating relevant processes, policies or procedures and rolling out any training and education to the business may achieve this.
Having effective training and education in place is particularly important due to the widened scope of liability and stricter penalties, which firms may be subject to for non-compliance with the 6AMLD. For example, prison sentences for individuals found guilty of money laundering crimes will increase from one to four years. Also, as mentioned above, liability will be extended to include legal persons.
With this in mind, by June 2021 effective enterprise-wide communication campaigns should be rolled out, including to all appropriate staff who require training on how to identify risks associated with the 22 predicate offences.
Commission Reports: 2022 & 2023
The European Commission will be responsible for assessing the success and impact of the directive. Within two years of the implementation date, the Commission will draft two separate reports on the directive – one looking at how the directive was implemented by member states and the other assessing the overall impact of the 6AMLD on money laundering activities across the union.
The Commission’s conclusions regarding the implementation of the 6AMLD will likely shape the future of AML regulation in the EU. With such as quick transition from the 5th to 6th AMLD, we can assume with a high degree of certainty that 7AMLD is just around the corner.