24 January 2024

Anti-money laundering: Council and Parliament agree on stricter rules in EU

In 2021, the European Commission presented an ambitious package of legislative proposals to strengthen the EU's rules on anti-money laundering and the countering of terrorism financing (AML/CTF). On 17 January 2024, the Council of the European Union and the European Parliament agreed on parts of this package. The main purpose of the new rules is to harmonise European rules and align these with the recommendations of the Financial Action Task Force (FATF), setting out a framework of AML/CTF measures countries should implement.

UBOs –EU threshold and Dutch UBO register

The definition of ultimate beneficial owner (UBO) in EU rules will be amended in line with the FATF Recommendations. Right now, the UBO test is having an interest of "more than 25%", but this threshold will change into exactly 25%. The EU stated in its press conference of 18 January that it proposes lowering the UBO threshold to 15% in high-risk situations.

On 22 November 2022, the Court of Justice of the European Union declared that information in the UBO register may not be made public because of conflict with privacy rules. To address this issue, Dutch legislation will be updated following public consultation. The updated legislation is expected to enter into force later this year.

FIU's right to suspend transactions

In some EU member states, the national FIU already has the right to suspend a proposed transaction after receiving a report of an unusual transaction. This right has not been introduced in the Netherlands yet, but will become EU-wide under the new rules.

Reporting unusual or suspicious transactions

The draft European rules refer to reporting a suspicious transaction to the national FIU, in line with the FATF Recommendations. However, a lower threshold applies in the Netherlands, because reporting is required for any unusual transaction. This lower threshold is expected to be kept in place in the Netherlands.

New AML-regulated institutions

New AML-regulated institutions will be introduced. All crypto-assets providers (CASPs) must carry out client due diligence, and enhanced client due diligence when conducting cross-border correspondent relationships. Professional football clubs and agents will become AML-regulated institutions under EU rules beginning in 2029.

Wider powers for AMLA

A new European supervisor will be introduced. The AML Authority, AMLA, will be set up later this year. AMLA will supervise financial AML-regulated institutions, such as banks. It has been decided that AMLA will also supervise (via supervisory colleges) non-financial AML-regulated institutions, such as auditors and law firms. The new supervisor's location will be decided in the coming weeks.

High-risk countries

Enhanced client due diligence must be performed in high-risk situations under Dutch AML legislation. The EU's high-risk countries will be brought in line with the FATF's high-risk country list, and member states will need to follow this. However, the European Commission will still make its own assessment of which countries qualify as high risk.

Limitations on cash payments

It has been decided that, at the EU level, there will be a EUR 10,000 limit for cash transactions. For cash transactions between EUR 3,000 and EUR 10,000, AML-regulated institutions must identify, and verify the identity of, the parties involved. Draft Dutch legislation prohibits traders in goods to enter into cash transactions for amounts of EUR 3,000 or more.

PEP status for mayors

In some EU member states, a mayor is a politically exposed person (PEP), depending on the number of residents in the relevant area. Current Dutch AML legislation does not consider mayors PEPs, but a new PEP category will be introduced in EU legislation where mayors with a population of over 50,000 residents will be PEPs.

What next

The texts of the new European AML package will be finalised and must be approved by the European Committee of Permanent Representatives and the European Parliament. Publication will be take place after the Council of the European Union and the European Parliament have adopted the package. Implementation is expected in 2027.