In this article we will dive into how the EU’s 6th AML Directive plans to counter risk
The European Union has continued its quest against money laundering as we now see the 6th Anti-Money Laundering directive (AMLD) fast approaching, not long after the 5th AML directive rolled out. The question many of us are asking is this; how does the EU’s 6th AMLD counter risk? Let’s take a look.
All About the 6th AMLD
The overarching goal of the 6th AMLD is to take a stand against new money laundering and funding of terrorism risks, giving more emphasis to cybercrime. As pointed out in this article by CSB Group, this new installment of the AMLD shows that the government is now recognizing the seriousness of these cyber threats and treating them as concerns of national security.
This directive looks to make a change by increasing accountability and widening the scope of responsible parties in these cases. The 6AMLD intends to extend criminal liability to legal persons such as the companies and organisations themselves, while the responsible persons within such entities (directors, decision takers and those acting for and on behalf of the company) shall be subject to criminal liability. Therefore both the company and the high-ranking officials will now hold responsibility and will be held liable and accountable when there are failings.
The timeline here appears to be a fast-moving one, letting people in Fintech and Regtech know that changes are coming and they are coming quickly. According to crowdfund insider, the 6th AMLD is expected to be introduced into national laws on December 3rd, 2020, and all entities are expected to fully enforce the principles by June 3rd, 2021. The regulatory responsibility will be falling on the European Banking Authority (EBA), as they will be overseeing the entire process.
In the grand scheme of things, we are just 16 months away from the implementation of the 6th AMLD, which means it’s crucial that companies begin to understand these changes and become compliant sooner rather than later. Not only are the responsible parties changing and widening in scope, but the associated penalties are also intensifying. This means that those convicted can now face up to four years of prison time, which is an enormous leap from the previous maximum penalty of just one year. Yes, this isn’t an area you want to mess around with.
The Impact of the 6th AMLD
In total, there will now be 22 predicate money laundering offences. This new directive is a clear crackdown on money laundering and a statement that the EU will no longer tolerate this behavior or criminal activity. It was just two and a half years ago, June of 2017, that we saw the 4th AMLD take effect. The incredibly quick follow up of the 5th, and now the 6th AMLD, is evidence that this train is now only going in one direction. Consequently, businesses need to take notice of this changing landscape and protect themselves and their high-ranking executives.
As pointed out by vinciworks, it is time to begin implementing better and more sophisticated training, risk assessments, and internal procedures. If your business is behind on any of these safeguards, it is time to follow suit with what the EU has done and make this a priority on a daily basis for your organization.
With as quickly as this has all come about, it isn’t far fetched to think that soon we will hear whispers of a 7th AMLD, which could bring with it even harsher and more wide-ranging punishments.
What it All Means
The only constant in life is change. The technology revolution has changed the world for the better, but with that, it has created more vulnerabilities and more risk. Cybercrimes and cybersecurity are increasingly at the forefront of high-level personnel’s concerns. In all industries, regulation eventually catches up with improvement and advancement. In the cyber world, regulation is catching up with cybercrimes.
It’s easy to understand that when legislative changes and directives like this happen they can slip through an organization’s radar. You are busy dealing with your day to day operation, focusing on your customers’ wants and demands, and your compliance department already has their hands full, to begin with. With that said, when you see this many evolutions of the same directive being released and implemented with an intensified nature, it’s not something that you can continue to ignore.
The good news is that it’s not too late. Use this as a wake-up call. Understand the impact of these changes and take time to build out training and processes that will help you become compliant and stay compliant. With both your business and individuals within the organisation now on the line, this should be a point of emphasis for everyone top down. The EU’s 6th AMLD is here, and its impact will create lasting change in the Regtech world.