The EU has recently implemented the Fifth Money Laundering Directive (5AMLD). However, the EU will implement the Sixth Anti-Money Laundering Directive (6AMLD), a new directive due to some uncertainties in 5AMLD. Organizations are required to have 6AMLDs by 3 June 2021. With the 6AMLD, the EU aims to identify money laundering crimes and focus more on sanctions deeply.
What Is The Sixth Anti-Money Laundering Directive (6AMLD)?
European Union regulations are legal procedures with strict rules that are valid at the national level. With the approval of directives at the EU level, all EU countries become directive applicable. The main purpose of EU regulators in preparing these directives is to protect customers and businesses from illegal activities such as money laundering. Sixth Anti-Money Laundering Directive (6AMLD) is also a European Union regulation. 6AMLD is tougher than 5AMLD regulations. The EU aims to give financial institutions greater responsibility in the fight against money laundering and financing of terrorism by expanding the AML regulations of existing institutions, strengthening some criminal sanctions. 6AMLD expands the field of action, identifies key points for crime evidence, and proceeds in cryptocurrency regulation.
Although it is difficult for financial institutions to comply with this legislation, financial institutions can also prevent crimes caused by money laundering more easily thanks to these laws. Money laundering is directly linked to crimes such as terrorist financing, smuggling, bribery, corruption, and human trafficking. With 6AMLD, financial institutions can implement a more effective AML program and prevent money laundering crimes. Organizations operating in the EU region must comply with 6AMLD by 3 December 2020. In addition, organizations operating outside the EU have to comply with 6AMLD by 3 June 2021.
Why Financial Institutions Need 6AMLD?
Anti-Money Laundering is one of the most intense areas of financial regulation. With the development of the sectors, money laundering crimes also develop, and the steps taken by the sectors to prevent these crimes are insufficient. It is not surprising that there are new regulations because everything in the world is developing and changing very quickly. As long as criminals develop their activities with technology, new regulations will always be available. 6AMLD also includes new regulations to help financial businesses combat money laundering. 6AMLD regulations aim to easily identify and evaluate the actions of anyone involved in or 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 identify those who help and support them. In the rest of the article, You can find some important changes in 6AMLD.
Aiding and Abetting
Previously, anti-money laundering regulations tried to punish those who financially benefited from money laundering activities. In addition, companies have directly punished those involved in money laundering and terrorist finance. With 6AMLD, not only those who financially benefit from money laundering but also those who promote, support, abetting, provoke, attempt, or covertly support this crime will be considered legally guilty. With this law, it is aimed to increase the penalties and decrease criminal activities. Although these penalties are generally determined as military four-year prison terms, they may vary depending on the situation.
Increased Penalties of Real Persons
The penalty for money laundering activities previously carried out by real persons in financial companies in the EU's member states was one year, and this was demanded to increase. With 6AMLD, they will now face up to four years in prison for money laundering offenses committed by natural persons. This is just one of the EU's policies to deter individuals who are caught with money laundering. Moreover, prior to this law, many EU member states envisaged and expected this directive.
Criminal Responsibilities of Legal Persons
Another important change in 6AMLD is the extension of criminal liability to legal entities. This means that if any person in an organization has committed money laundering crime, or if assistance has been found, 6AMLD will charge criminal liability to legal entities. Legal entities mentioned here may be a company. This law was introduced as organizations operating in the EU Member States can no longer prevent money laundering, and as a result, legal entities may be held criminally liable if they are caught doing money laundering activities. Although the penalties given vary, for example, temporary banning of companies and permanent closure of businesses can be given.
Cooperation of Member States
The 6AMLD directive supports the cooperation of member states in the trial of companies or individuals carrying out money laundering crimes. In other words, while money laundering occurs in one country, it can occur in another country, so local judicial authorities will be required to share information to allow prosecution of crimes in two or more Member States. And there will be cooperation between these member states. In this cooperation, factors such as the place where the crime was committed, the nationality of the criminal, its residence, victim countries, and the country where the crime was committed will be taken into consideration. Member States will want to punish crimes such as human trafficking, corruption, drugs, organized crime, tribute, terrorism, regardless of whether these crimes are legal in their jurisdiction.
With 6AMLD, at least four years imprisonment law was introduced for money laundering offenses, which was a military year before and increased according to new rules. Besides, heavy sanctions such as the closure of a business and fines of up to 5 million Euros were introduced. The main objective of these penalties and sanctions is to prevent money laundering and terrorist financing activities that can take place in the member states of the EU.
How Should Member Countries Prepare for 6AMLD?
Changing regimes have an ultimate effect on companies. The new directive has been prepared to change the way businesses view the AML / CFT compliance, and many changes need to be followed. According to 6AMLD, companies will be liable for heavy penalties if they are found to have committed a crime, and, as we mentioned earlier, they will be punished even if they do not commit a crime directly or even help. Therefore, financial institutions need to understand risks and threats in-depth and take necessary steps to eliminate the possible risk of criminal crimes. Companies must perform a fully updated installation to comply with these regulations. Traditional methods should be abandoned, and programs that are fully technology-compatible should be used.
Sanctions Scanner was developed to protect companies from financial crime. With the Sanctions Scanner, you can comply with EU regulations, so you are protected against regulatory penalties. The key to effective AML programs is a risk-based approach. Businesses can determine customer risk levels with our AML Screening and Monitoring service while opening a customer account for an accurate risk assessment.
Organizations can create an AML control program that suits their risk levels by scanning their new customers in global comprehensive negative media, sanctions, PEP data. Also, this crawling can be done in seconds via the web, API, or batch search. Businesses have to verify their customers by obliged organizations under AML to avoid financial crime risks. With our AML Name Screening Software, you can perform CDD and KYC operations in accordance with the obligations.
Discover Our Other AML Solutions