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5th Anti-Money Laundering Directive (5AMLD): What You Need To Know

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The Fifth Money Laundering Directive (5AMLD) came into force on January 10, 2020. Building on the regulatory regime applied under its predecessor, 4AMLD, 5AMLD reinforces the European Union’s AML/CFT regime to address a number of emergent and ongoing issues. The impact of 5AMLD is far-reaching. In this article, we’ll discuss its key changes and hear from industry experts about why they matter.

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How 5th Anti-Money Laundering Directive Affects Cryptocurrency

“More regulation creates clarity – and clarity creates peace of mind”
Remigio Bonguliemi – Chief Compliance Officer,

Although much of 5th Anti-Money Laundering Directives content updates the 4AMLD, it makes a significant new legislative step in the treatment of virtual currencies. 5MLD cryptocurrency measures introduced include:

  • A legal definition of cryptocurrency which may broadly be regarded as “a digital representation of value that can be digitally transferred, stored or traded and is accepted…as a medium of exchange.”
  • Cryptocurrencies and cryptocurrency exchanges are considered “obliged entities”, and face the same CFT/AML regulations applied to financial institutions under 4AMLD. Practically, this involves an obligation to perform customer due diligence (CDD), and submit suspicious activity reports (SAR).
  • 5th Anti-Money Laundering Directive actually goes further than 4AMLD in imposing reporting obligations by giving Financial Intelligence Units (FIU) the authority to obtain the addresses and identities of owners of virtual currency and, in so doing, to push back against the anonymity associated with the use of cryptocurrency.
  • 5AMLD also introduces regulation for providers of cryptocurrency exchanges and eWallets – which must now be registered with the competent authorities in their domestic locations, for example, Germany’s BaFin, or the UK’s Financial Conduct Authority.

The introduction of regulations paves the way for EU operators to introduce more cryptocurrency products and, crucially, to compete with Asian countries, which have already made legislative progress in integrating cryptocurrency with financial markets. 

Remigio Bonguliemi, Chief Compliance Officer of, points out that safety is key to increasing confidence in cryptocurrency: “If you’re launching centralized products, having regulations is incredibly helpful to be able to sleep at night and know that you’re not doing anything illegal.”

How 5AMLD Impacts Prepaid Cards

After 4AMLD cut the monthly transaction limit on anonymous prepaid cards to €250 (a measure to combat terrorist financing), 5th Anti-Money Laundering Directive sets an even lower limit of €150: this limit also applies to the amount that can be stored or topped-up on the cards. The 5AMLD limit means that firms will be required to carry out identity checks on customers using prepaid cards funded with more than €150. Similarly, anonymous remote or online transaction limits are reduced to €50.

Prepaid cards issued outside the EU are now prohibited unless they were issued in a territory enforcing legislation equivalent to the EU’s AML/CFT and KYC standards. Obliged entities must review the way they handle prepaid card payments and put mechanisms in place to identify (and refuse) transactions using cards from non-EU sources. This requirement may involve significant revision of existing systems and procedures.

Christopher Baines, the Head of Compliance at Pockit, said: “The (5th Anti-Money Laundering) directive is definitely a step in the right direction: it reduces the number of options for criminals.”

5AMKD and High Value Goods

5th Anti-Money Laundering Directive expands the scope of legislation regarding other stores of value: art traders, for example, or those acting as intermediaries, now have AML/CFT reporting obligations and will have to perform due diligence procedures on customers. The directive specifically singles out high value works of art for the first time, by applying AML checks to transactions involving art which amount to €10,000 or more. That rule applies to single transactions or multiple linked transactions.

The scope of 5AMLD is not limited to art. Transactions involving a range of high value goods are considered high risk – including oil, arms, precious metals, and tobacco. Notably, historical, cultural and archaeological artifacts are included in the regulation – a move to specifically target funding for terrorist groups such as ISIS.

How 5th Anti-Money Laundering Directive Affects Beneficial Ownership

In 2017, 4AMLD introduced a focus on ultimate beneficial ownership (UBO) for the purposes of risk mitigation and money laundering prevention. 5th Anti-Money Laundering Directive builds on those steps, introducing the following measures:

  • UBO lists (drawn up under 4AMLD) are to be made publicly accessible within 18 months of 5AMLD’s implementation date.
  • Trusts (or any similar arrangement) must observe beneficial ownership regulations and, like companies, must make that information available to authorities or others demonstrating legitimate interest.
  • UBO national registers must be inter-connected at an EU level in order to facilitate cooperation and the exchange of information between member-state authorities.
  • Member states are to strengthen their UBO verification mechanisms to ensure the information they carry is accurate and reliable.
  • Member states must introduce separate UBO registers for bank accounts: unlike company UBO registers, these lists will not be publicly available and only accessible by authorities.

The requirement to register beneficial ownership and have that information publicly available is, according to Global Head of Business AML, at Banking Circle, Livia Benisty, “a vital first step in detecting some of the vast flows of illicit funds transmitted through the financial system, and places a handicap on the preferred instrument of money launderers globally.”

5AMLD in High-Risk Third Countries

Companies that do business with customers from high-risk third countries are, under 5th Anti-Money Laundering Directive, required to perform enhanced due diligence measures specifically focused on addressing the deficiencies in those countries’ AML protections and the money laundering risks they present. The measures require firms to:

  • Obtain information on customers and UBO, including establishing the purpose of proposed transactions and the source of UBO funding and wealth.
  • Report transaction details with high-risk third countries to senior management and obtain approval prior to establishing or continuing those business relationships.
  • Increase controls on specific business relationships and identify transactions that may need further scrutiny.

Politically Exposed Persons (PEPs)

5th Anti-Money Laundering Directive requires EU member states to compile and publicly release a functional PEP list made up of prominent politically exposed public functions. This requirement extends to accredited international organizations: the EU will also release an EU-level version of the list.

Functional PEP lists are rare and so can require explanation. The list created by the EU member states under their 5AMLD compliance obligations will feature the positions that are considered politically exposed but will not name the person fulfilling the function (which, of course, will change periodically). These lists are designed to make it easier for smaller compliance teams, or those with lower volumes of customers, to identify the PEPs that they should be screening against and monitoring for ongoing changes to risk. 

Keeping a list of people performing these functions up to date may involve significant administrative effort. As Joanna Jenkins, Chief Compliance Officer at Railsbank pointed out, since “data discrepancies could cause issues,” companies should take careful steps to ensure a sufficient level of compliance.

This article should be used as a guide and not taken as legal advice.


Complying with 5AMLD

Are you struggling with the EU’s Fifth Anti-Money Laundering Directive? ComplyAdvantage’s data and solutions can be used across financial services to make sure business meet and exceed regulatory expectations. So whether you’re a cryptocurrency exchange, auction house or prepaid card provider our real-time data and screening solutions will ensure that you are 5AMLD compliant.


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5AMLD Updates

Read our article update to see any significant changes to the 5th Money Laundering Directive

Originally published September 2, 2018, updated May 9, 2022

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

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