What does the 6th Anti Money Laundering Directive (6AMLD) mean for businesses in the UK?

    Businessman in handcuffs

    By 3rd June 2021, businesses operating in the EU must meet the new regulations set out by 6AMLD.

    Following the 5AMLD coming into force in January 2020, updates have now been made for 6AMLD, which is due to be transposed into national laws by December 2020 – barely a year later.

    However, the UK has decided to opt out of complying with this further AML regulation as the Government assesses that the domestic legislation is already largely compliant with the Directive's measures.

    But, the 6AMLD will still be relevant to those UK businesses operating in the EU, so let's take a closer look at the regulation...

    Firstly, what is the Anti-Money Laundering Directive?

    The AML Directives, first set out by the European Union in 1991, are a set of regulations intended to prevent money laundering and terrorist financing.

    From its initial focus on drug-related offences and bringing the EU’s anti-money laundering framework in line with the Financial Action Task Force, more recent revisions have widened their scope to encompass transaction monitoring and more as the world of finance and financial crime becomes increasingly digital.

    How does 6AMLD differ from 5AMLD?

    Like 6AMLD, 5AMLD was brought in quickly after its predecessor. This was in response to terrorist attacks which brought to light the new ways in which terrorist groups financed and conducted their operations.

    Essentially, 5AMLD expanded on 4AMLD with further due dilligence measures to be followed in high-risk situations.

    6AMLD, in comparison, is expected to be much tougher than 5AMLD, identifying money laundering crimes more quickly and focusing more deeply on the sanctions for these crimes. It also gives financial institutions more responsibility in the fight against financial crime. As outlined by Sanction Scanner:

    “6AMLD regulations aim to easily identify and evaluate the actions of anyone […] involved in the illegal criminal activities of companies. It also aims to reveal the real activity, source, location, movement, and rights of the crime and to identify those who help and support these crimes.”

    Here are the five biggest changes to the directive’s anti-money laundering regulations that we can expect:

    1. Increased prison sentences and fines

    While financial crimes committed under 5AMLD carried a one-year minimum prison sentence, 6AMLD calls for a minimum of four years, as well as fines.

    2. One definition of predicate offenses across the Member States

    This allows for a standard categorisation of predicate offenses as a criminal act. For the 6AMLD, 22 predictate offences have been outlined, with a particular focus on cybercrime.

    3. Dual criminality will now be accounted for

    Cross-border cooperation (where a crime may happen in one place while money laundering happens elsewhere) will now be taken into account as part of the 6AMLD, as local jurisdictions will be required to share information to allow for the prosecution of offenses in two or more Member States.

    4. Criminal liability is extended to legal persons

    Failing to prevent money laundering will result in punishments such as the temporary pause of trading or complete business closure.

    5. Aiding and abetting

    Previously, anti-money laundering regulations would only punish the beneficiaries of a financial crime. With 6AMLD, however, those who are found to help money laundering take place in any form will now also be punishable by 4-year prison sentence.

    Financial Penalty

    So how can professionals in the finance sector prepare?

    Although the majority of 6AMLD is consistent with 5AMLD, the financial sector (among others) will need to review and identify improvements in their anti-money laundering processes.

    One of the most popular ways that financial professionals are currently aiming to achieve this is through a combination of intensive staff training and the use of technology, including RegTech.

    By harnessing technologies such as data analytics, AI, natural language processing and more, RegTech has the means of enabling financial professionals to not only automate more of their processes (and therefore spend more time focusing on the prevention of financial crime), but also monitor transactions and other AML activity more closely.

    Looking towards the future

    One of the key takeaways for financial professionals here is that, as the world continues to change and develop, they should also be prepared for the further evolution of anti-money laundering regulations.

    This means being as open, flexible, and pro/reactive as possible in order to not only maintain compliance, but continue to crack down on financial crime - now, and well into the future.

    Here at Twenty84, we’re all about embracing the future, and are always looking for new and innovative means to prepare financial sector candidates for what lies ahead.

    To discuss this in more detail with our experienced team, get in touch today:

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