The principal elements covered:
- Virtual currency exchange platforms and custodian wallets.
- Interconnection of national registers of beneficial ownership and access to the registers.
- Systems to identify the holders of bank or payment accounts.
- Use of prepaid cards.
- Enhanced standards for transactions with high risk third countries.
1. Virtual currency exchange platforms and custodian wallets
The new Directive extend the obligations of such service providers to bring them into line with banks and other financial institutions to comply with customer due diligence requirements. The Directive also provides clear definitions of ‘virtual currencies’ and ‘custodian wallet provider’(see definition below).
2. Interconnection of national registers of beneficial ownership and access
The 5AMLD amends the earlier directive which provides that access to national registers of who ultimately owns or controls corporate or other entities should be granted to the general public, subject to the applicant demonstrating a legitimate interest. This condition has been removed and the beneficial ownership registers are open to inspection by the general public.
Information held on the beneficial owners of trust will also be opened to the general public but only those members who demonstrate a legitimate interest. Previously access was restricted to competent authorities, Financial Intelligence Units and entities subject to customer due diligence rules. Should a trust be the beneficial owner of an entity, a member of the public can file a written request for information.
The 5AMLD also includes a requirement that Member States interconnect their registers to facilitate the exchange of information and cooperation between States. The interconnection will be on the ‘Central European Platform’ and should be completed by March 2021.
3. Systems to identify the holders of bank or payment accounts
Member States are required to establish a centralised register or electronic data retrieval system to identify the holders or controllers, whether legal or natural persons, of payment accounts, bank accounts and safe deposit boxes. National Financial Intelligence Units will be given access to the registers.
4. Prepaid cards
The monetary thresholds for the identification of the holders of prepaid cards has been reduced, at the same time as the maximum payment that can be made by anonymous prepaid card has also been cut. The threshold has been reduced to €50 online and €150 for instore transactions.
5. Enhanced standards for transactions with high risk third countries
Non-EU countries that have been identified by the European Commission as having deficiencies in their anti-money laundering and counter terrorism regimes will be subject to more stringent standards on financial transactions. Companies transacting with any listed countries with be required to undertake an enhanced process of due diligence. While the AMLD harmonises the due diligence requirements across the EU, it is open to Member States to require additional compliance in order to mitigate the risk of such transactions.
5AMLD definitions: ‘Virtual currencies’: ‘a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically.’
‘Custodian wallet provider’: ‘an entity that provides services to safeguard private cryptographic keys on behalf of its customers, to hold, store and transfer virtual currencies.’
If you have any queries, please contact Simon Huxford.