The countdown to implementation is into the single digits. On June 3, 2021, the EU’s Sixth Anti-Money Laundering Directive (6AMLD) enters into force for financial institutions and companies, bringing a whole host of compliance-related changes with it. So it’s critical that firms operating in the EU fully understand the details of these new regulatory requirements. With that in mind, let’s take a quick look at some of the key changes 6AMLD will bring.
- Clarifies Predicate Offenses
6AMLD attempts to update, harmonize and clarify what constitutes a predicate offense for money laundering across all EU member states. It lists, then defines, 22 different crimes that would explicitly now be components of money laundering. Particularly of note is the inclusion of cybercrime and environmental crime alongside more traditional money laundering predicate offenses — a decision that serves to underscore how concerned regulators are about these rapidly growing threats.
- Widens Scope of Money Laundering Offenses
Building on the above, 6AMLD also formally recognized the conversion or transfer and the concealment of illicit property as a money laundering offense, as well as the conscious acquisition, possession, or use of such property. Acts such as self-laundering and aiding and abetting a money launderer made the list too.
- Extends Corporate Liability
Businesses — not just individuals — can now be considered liable for money laundering offenses, and law enforcement can pursue the prosecution of both individuals and businesses at the same time. Further, businesses and those in senior roles within the business can be liable for failing to prevent money laundering by junior staff members on their watch.
- Introduces Tougher Punishments
Harsh punishments can be effective deterrents — at least that’s the hope. 6AMLD steps up the maximum prison sentence for money laundering. Now those convicted will stay behind bars for up to four years (up from one). Money launderers also face fines, professional disqualification, exclusion from public benefits, and, for businesses, forced closure.
For compliance officers, these changes are likely looked upon with a bit of trepidation. While the harmonized definitions should provide a bit of clarity and relief, the number and breadth of the predicate offenses, combined with additional liability exposure and harsher punishments, inevitably increase the exposure to risk.
It’s also worth noting that for certain UK companies, there’s an added wrinkle: while the UK has left the EU and decided it will opt out of complying with 6AMLD, those who operate within the EU’s jurisdiction are still obliged to comply.
To prepare for these changes, financial institutions and regulated entities must recalibrate their AML/CFT screening processes. Those who have already switched from legacy screening solutions to automated screening and transaction monitoring tools have a leg up. Nevertheless, companies may find that 6AMLD requires an even wider use of tools. Solutions such as adverse media monitoring and categorization go that step further to identify and assess risk within the context of predicate offenses in real-time. So compliance officers can rest easy that nothing is slipping through the net.