Money laundering is a global issue that has the potential to undermine the integrity of any business, as well as the financial sector as a whole. The estimated amount laundered annually is between $800 billion and $2 trillion (UNODC, 2019) – a staggering figure demonstrating the severity of the issue.
As technology evolves at a rapid rate, the potential for money laundering is rife. Launderers use countless methods to launder money electronically including transfer of funds, private banking, insurance companies and securities broker-dealers. Travel agencies, casinos, vehicle sellers, shell companies and trusts are also used to hide illicit gains and mask beneficial ownership.
In recent years, the European Union has taken particularly stringent measures to protect the integrity of the financial system. Companies caught are fined billions and since 2018, anti-money laundering (AML) regulations and enforcement measures have reached new heights worldwide.
On 12th November, 2018, the European Parliament published the sixth Anti-Money Laundering Directive (6AMLD), a set of rules designed to further strengthen the global fight against money laundering.
In accordance with the 6AMLD, EU Member States are required to implement relevant regulations into national law by 3rd December, 2020. Other firms within EU member states must familiarise themselves with the 6AMLD and the implications for compliance processes. By 3rd June 2021, these regulations must be implemented.
As identified by Prospectacy’s experts the key amendments for the 6th directive that will contribute the most to the AML efforts are as follows:
Unified list of predicate offences
All EU Member States must criminalise 22 specific offences for money laundering. Updated offences include cybercrime, environmental offences and direct/indirect tax offences.
Compliance officers at Prospectacy have familiarised themselves with the updated offences, which reflect the shifting priorities within the EU and the changing nature of the threat landscape.
Additional Money Laundering Offences: Aiding and Abetting
The Directive has also been broadened to include aiding and abetting money laundering offences. This refers to individuals who act as accomplices in the money laundering process.
Extension of Criminal Liability to Legal Persons
A key amendment under the Directive is the extension of criminal liability to legal persons, where a company, partnership, representative or decision-maker has committed illegal activity within a company for the benefit of the organisation.
Increased International Cooperation for Prosecution of Money Laundering
In the event that two Member States have jurisdiction over the prosecution of an offence, both must collaborate and agree upon which Member State to prosecute in.
More Stringent Punishments
Under the new Directive, imprisonment has increased from a minimum of one year to at least four years. Further, any prison sentence must be supplemented with proportionate sanctions, such as fines. Punishment will also extend to legal persons, including exclusion from public benefits, a ban from doing business (temporary or permanent) and the closure of the establishments used to commit the offence (temporary or permanent).
Sergey Babayan, Prospectacy’s Operations Manager raises the importance of complying with the 6AMLD regulations: “With serious consequences in place, non-compliance cannot be justified. Companies must take the increasingly complex compliance arena as seriously as any other business risks, using state-of-the-art data and technology to reduce their risk exposure to money laundering. They must implement and oversee policies that are 6AMLD compliant, while providing strong, explicit and visible support for their corporate compliance policies. “