Compliance requirements in the future EU Anti-Money Laundering and Countering the Financing of Terrorism Framework

Abstract

As gatekeepers of the financial system, financial institutions and payment service providers play a pivotal role in detecting suspicious activities and transactions. Recognising the inefficiencies and ineffectiveness of the current EU Framework for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), in 2021 the European Commission issued a package to address these issues and improve the framework. This package is very likely to be adopted by the EU co-legislators in Q1 2024. It encompasses four legislative instruments: (1) the proposed AML/CFT Regulation will harmonise the rules and obligations for the private sector (COM/2021/420 final); (2) the proposed AML/CFT Directive will harmonise tasks and powers of public authorities (COM/2021/423 final replacing the existing Directive 2015/849/ EU); (3) the proposed AML Authority Regulation will establish the Authority for Anti-Money Laundering and Countering the Financing of Terrorism, amending Regulations (EU) No. 1093/2010, (EU) 1094/2010, (EU) 1095/2010 COM/2021/421 final); and (4) a proposal to recast the Fund Transfer Regulation to trace the transfer of crypto-assets (COM/2021/422 final reviewing Regulation 2015/847/EU). This paper will describe each of these legal instruments, with a focus on the AML/CFT Regulation, which provides financial institutions and payment service providers with a new ‘AML Rulebook’.