The Fourth Anti-Money Laundering Regulation [849/2015] (MLD4) began enforcement in June 2015 in light of the combat against money laundering and financing of terrorism. Aligned with international standards established by the Financial Action Task Force (FATF) in 2012, MLD4 is now set to change, substituting MLD3 across all Member States by 26th June 2017.
In addition, the EU Commission also initiated another directive this year, MLD5, with the aim of taking MLD4s place.
John Marsden, Head of ID and Fraud at Equifax says: “At least a hundred billion pounds, equivalent to the GDP of Ukraine, is reportedly being laundered through the UK every year*. Financial services providers are vital in the fight against financial crime and its damaging impact; only by implementing robust screening processes and checks on potential customers can they help reveal hidden launderers among the mass of genuine individuals. Combined with the risk of substantial fines if requirements of MLD4 are not met, companies have plenty of reason to ensure their systems are fully prepped for the July deadline.
“The major change companies must take on board is the way they handle politically exposed people (PEPs). These individuals hold some element of political power, making them potential targets for bribery and corruption, and are firmly in the eye of the regulator. MLD4 hones in on this group to a greater degree than previous regulation by encompassing domestic politicians. UK companies must now have enhanced due diligence in place to efficiently identify and monitor UK politicians and their associates and relatives, who in turn must carefully document where their finances come from. Companies must also be aware of the “tipping off offence” under the Directive, which could see additional fines for making those under investigation aware of the situation.
“Financial crime has serious social and economic impact. The crackdown is becoming more prevalent, as evidenced by the Criminal Finance Bill and establishment of the Joint Money Laundering Intelligence Taskforce, and companies must act now to ensure they play their part.”
See here for more detailed information on the amendments made to MLD4 and the proposed MLD5.
*Home Affairs Committee report, 2016
