When is 4MLD to be implemented?

The EU’s Fourth Anti-Money Laundering Directive (4MLD) was enacted on 25th June 2015 replacing the previous Third Money Laundering Directive. The Directive provided a two-year window for it to be implemented throughout the EU, meaning that all member states need to be compliant with 4MLD by the 26th June 2017.

We have previously provided a summary of 4MLD, yet, it seems additional revisions to this expected framework may also be introduced next year.

Enhancing the AML/CTF Framework across Europe:

The terrorist attacks across Europe last summer and the leaking of the Panama Papers gave cause for institutions across Europe to call for a speedier implementation of 4MLD’s new rules with the European Commission proposing to bring 4MLD forward to 1st January 2017. However, these events also gave rise for the European Commission proposal of additional measures to further reinforce the Anti-Money Laundering and Counter Terrorist Financing framework 4MLD is set to bring.

Proposed amendments to 4MLD – a Fifth Directive?

These proposed amendments to 4MLD have been commonly referred to as the Fifth Money Laundering Directive or 5MLD. Whilst the European Commission proposed to bring forward the transposition date of 4MLD to 1st January 2017, at the end of last month (28th October 2016) the EU Council Presidency as now suggested otherwise.

In the latest Fourth Money Laundering Directive compromise proposal from the EU Council Presidency (14th November 2016), they proposed to combine 4MLD and the proposed amendments to the directive (5MLD) so that they be transposed together by 4MLD’s implementation date of 26th June 2017 rather than the start of next year.

Within Presidency’s cover note, the compromise proposal states that with regards to the original EC legislation proposal, new text is marked in underlined bold and deletions are indicated using strikethrough text.

The Commission’s adopted proposal – 5MLD – aims to further reinforce the EU’s rules on anti-money laundering, counter-terrorist financing as well as increase the transparency of financial transactions and of corporate entities by setting out additional measures.

The European Parliament are set to vote upon the latest proposal for 4MLD and 5MLD on 25th January 2017, thus we shall have to wait until then to see whether June’s implementation date will be for both 4MLD and 5MLD or just the former.

4MLD Compliance Support:

Financial crime and AML remain high on the regulatory agenda and will continue to be so. It is thus incredibly important to ensure your firm puts in place the right policies and procedures to ensure compliance with 4MLD requirements.

All firms should now ensure they understand the changes 4MLD will bring and review how they will be affected. If you would like any support or assistance in preparing for the new requirements, please get in touch with our experienced regulatory consultants.