The European Union’s 5th Anti-Money Laundering Directive (AMDL5) is an update to the union’s Anti-Money Laundering (AML) framework.
The European Union’s 5th Anti-Money Laundering Directive (AMDL5) is an update to the union’s Anti-Money Laundering (AML) framework. It came into effect on July 9, 2018, and required that the EU’s 28 member countries enact the update into national law by 10 January 2020.
An EU directive is a legal framework that encompasses a common goal each member state is required to achieve by including it in its own laws. Directives are not legally binding but failure to adhere to them may impose fines. Although the deadline has passed, some member states have still not been able to meet AMLD5’s requirements due to the complex regulatory challenges it presents.
AMLD5 has introduced new requirements for cryptocurrencies, Ultimate Beneficial Owner (UBO) registers, and prepaid card transaction limits. This update is expected to improve the EU’s anti-money laundering (AML) and combating the financing of terrorism (CFT) policies by closing loopholes that are still being exploited by financial criminals and bringing its efforts in line with new FATF Standards, which were updated in June 2019 to include virtual asset and virtual asset service provider guidance.
AMLD5 includes an update on obligated entities, which includes fiat-to-crypto companies and custodian wallet service providers, customer due diligence for funds from high-risk third countries, UBO registration, and Politically Exposed Persons (PEP) screening.