AMLD 7 is on its way or is it something even worse? What stands behind the EU AML regulatory package and how it will impact your business?

On July 20, 2021, the EU Commission published a package of regulatory proposals, intended to once again strengthen AML rules in the EU. The most important of them are:

What is interesting here is that most of the proposals will have a direct effect (meaning there will be no need in transposing them into national laws as in the case of ordinary directives). So, let’s dig deeper and figure out what stands behind every proposal.

1. Introducing of the EU Centralized AML Authority (AMLA)

At least at first time, AMLA will only act in a supportive role and will not substitute national AML authorities (known as FIUs). It would be the central authority to coordinate their endeavors and ensure that the financial companies throughout the EU correctly and consistently apply AML rules. AMLA would be established in 2023 and begin direct supervision in 2026.

2. Unification of AML/KYC rules in every EU state

The European Commission is tired of the inability and reluctance of the EU member states to implement AML directives (a perfect example is more than 3-years delay with the launching of UBO registers in Cyprus and Hungary), as well as the inconsistency of AML rules in different EU member states (where some states need only simple documents check and other require costly video-verification or EIDAS-compliant verification). Thus, the European Commission intends to pass a Regulation with regard to unification of AML and KYC rules with the direct effect (meaning no need to further implement the rules into the national laws).

3. Introducing of the EU centralized system of bank account registries

The system will act as a single access point to all national centralized bank account registries. It will allow the enforcement authorities in every EU state to get immediate information about bank accounts opened in the European banks, as well as their beneficiaries. Thus, access to the banking information will be much quicker and require no further authorizations and delays.

4. Enlarging the scope of crypto business models subject to AML requirements

Currently, only certain categories of crypto companies registered in the EU are required to comply with the AML rules. Basically, it refers only to crypto exchanges and crypto wallets. After the adoption of the new Regulation it will be extended to “any person whose occupation or business is the provision of one or more crypto-asset services to third parties on a professional basis”, including those providing:

the custody and administration of crypto-assets on behalf of third parties;
the operation of a trading platform for crypto-assets;
the exchange of crypto-assets for fiat currency that is legal tender;
the exchange of crypto-assets for other crypto-assets;
the execution of orders for crypto-assets on behalf of third parties;
placing of crypto-assets;
the reception and transmission of orders for crypto-assets on behalf of third parties;
providing advice on crypto-assets.

5. Implementation of the “Crypto Travel Rule”

The EU tends to follow the world’s tendency to adopt Travel Rule for crypto businesses. The Regulation would directly require every crypto company in the EU to adopt the crypto Travel Rule (once again, with no need for transposing those rules into national legislations). Thus, every crypto company (see the list above) will require to collect and exchange the information on the transfer originator and beneficiary with one another, as in the case of wire transfers. Want to know more aboutFATF’s Travel Rule?’

6. Prohibition of anonymous crypto wallets

It sounds terrifying at first sight, but the ban will be related to anonymous accounts in crypto exchanges and hot wallets. So it won’t impact the use of crypto via cold wallets and you will be able to hold and spend crypto anonymously (at least for now...).

7. Prohibition of cash purchases over EUR 10,000

While cash becomes more popular in certain EU states (especially in Germany), European Commission intends to ban cash purchases over EUR 10,000. Current limits vary significantly between EUR 500 in Greece to EUR 15,000 in Poland. While the limits under EUR 10,000 can remain in place, the limits beyond this number would be lowered accordingly.

All things considered, the regulatory proposals definitely signalize another AML crackdown, this time presented not in the usual form of another AML directive as we used to. Sure, it’s not AMLD 7, but it is definitely close by its very nature.

At ZeroTolerance we constantly keep an eye on changes in the EU regulatory framework. Using our Backend-as-a-Service KYC & AML solution you can be sure that you are fully compliant with every national and global AML rule.Get in touch with our team to see how ZeroTolerance can help you meet your AML requirements.