By Sandra Nebritova
The European Commission has presented a new package of changes on the legislation in the approach to Anti-money laundering.
This new package consists of four main points and addresses the weaknesses identified during the study of the latest AML breaches.
How will this affect Cyprus?
One of the most significant changes is creating the unified EU Regulator for AML – the Anti-Money Laundering Agency (AMLA).
While each country still gets to keep their own regulatory authorities supervising the AML programmes of the obliged entities, AMLA will have more powers and have the final say on rulings.
It will also be able to take control of a national agency if it failed to manage and react to risks appropriately.
This will definitely put additional pressure on national agencies (Cyprus being one of them).
Perhaps even jump-start more checks on currently supervised entities so that by the time the AMLA starts its operations at full speed, at least an initial clean-up has been already done.
Another important point is creating a single European Rulebook for AML that should be applied by all member states.
Previously, each Member State had some freedom in their interpretation and application of the EU Directives.
The Rulebook, however, will have a set of directly applicable rules that could not be changed.
This should place all member States in the same position and close some of the existing loopholes.
As some of the Member States are late in applying the EU Directives and still have weaknesses in their AML legislation, those states were more attractive for certain high-risk businesses and criminals trying to launder their proceeds of crime.
For Cyprus, these changes would not cause a lot of turbulence.
While some parts of the legislation take time to be amended and approved, generally, the Laws on Prevention of Money Laundering and Terrorist Financing are extensive, well-defined, and sometimes stricter than the proposed standards mentioned in EU Directives.
Third, an equally important point is the coverage of the whole crypto-currency business – the black horse of the financial market.
Proposed amendments will ban anonymous crypto-wallets and impose obligatory due diligence on the customers and transaction tracing.
Cyprus has seen an increase in crypto-businesses establishing themselves in the country.
While local regulators have issued their statements on the approach to such businesses, the proposed amendments will unify the approach for all the EU Member States putting all countries in the same position.
Proposed amendments also suggest covering companies with activities of residency-by-investment schemes, which have been attracting a lot of negative attention, crowdfunding, mortgage/credit intermediaries and consumer credit providers that are not classified as financial institutions.
Additionally, a proposed single limit on cash transactions has been set to €10,000.
However, those Member States that have previously decided to have a lower threshold can still keep their own, lower limit.
Last but not least is the single approach to countries outside the EU, listing “grey countries” – countries that pose risks but are ready to work on them to improve their legislation and control systems, and of “black” ones, countries that pose risks but do not wish to work on them, providing guidance and a set of appropriate measures to be used in such cases.
While it will take quite some time to implement all of the above-proposed changes, this is definitely a big step to an improvement and something to look forward to.
Sandra Nebritova is a certified AML specialist