AMLPEPsPolitically Exposed PersonsSanctions

AMLD4 and Domestic PEPS

By January 24, 2015 No Comments

AMLD4, the 4th amendment to the Anti-Money Laundering Act will update the European Union’s existing Anti-Money Laundering and Counter-Terrorist Financing laws by implementing recommendations made by the Financial Action Task Force, the international global standard setting body of AML and CTF rules.

The 4th amendment revisions came about after a review of the operations of the Third EU AML Directive, which will be replaced by the 4th Directive. The Financial Action Task Force is an inter-governmental body that was established with the objective of creating standards and promoting implementation of regulatory, legal and operational measures to combat money laundering, terrorist financing and similar threats to the international financial system’s integrity. After reviewing operations of the 3rd Directive the group saw that there was a lack of consistency between Member States regarding the rules of the directive and the 4th seeks to clarify rules.

AMLD4 will also provide a more focused and targeted risk-based approach requiring that documented risk assessments be conducted by Designated Persons and that they are maintained current and up to date. Designated Persons will be allowed to apply for simplified measures if it is justified using the risk-based approach. The Politically Exposed Person (PEP) definition will be expanded in AMLD4 to include ‘domestic’ PEPs. Domestic PEPs are residents in EU Member States, which adds to the foreign PEPs such as members of parliament or government, judges of supreme courts and heads of state.

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