Directive 2015/849 - Prevention of the use of the financial system for the purposes of money laundering or terrorist financing - Main contents

Summary of Legislation
Legislative text

1. Summary of Legislation

Preventing abuse of the financial system for money laundering and terrorism purposes

SUMMARY OF:

Directive (EU) 2015/849 — prevention of the use of the financial system for the purposes of money laundering or terrorist financing

WHAT IS THE AIM OF THE DIRECTIVE?

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It aims to combat money laundering* and the financing of terrorism* by preventing the financial market from being misused for these purposes.
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It seeks to strengthen EU rules and to ensure their consistency with the global standards laid down in the international recommendations adopted by the Financial Action Task Force.

KEY POINTS

The directive applies to:

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credit institutions;
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financial institutions; and
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designated non-financial businesses and professions, such as
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  auditors
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  external accountants
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  tax advisors
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  notaries and lawyers, in certain circumstances
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  estate agents
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  traders in goods (e.g. precious metals and stones, when payments of €10,000 or more are made in cash) and
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  providers of gambling services.

Those subject to the directive need to:

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identify and verify the identity of their customers and of the beneficial owners* of their customers;
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report suspicions of money laundering or terrorist financing to the public authorities, usually the financial intelligence unit;
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take supporting measures, such as ensuring the proper training of personnel and establishing appropriate internal preventive policies and procedures;
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take additional safeguards such as enhanced customer due diligence for situations of higher risk, such as trading with banks situated outside the EU and, in particular, when dealing with natural or legal entities established in non-EU countries identified by the Commission as high-risk non-EU countries.

The directive allows the Commission to adopt delegated acts in order to identify high-risk non-EU countries with strategic deficiencies in their anti-money laundering and terrorism financing regime. Such a delegated act was adopted on 14 July 2016 listing this kind of high-risk non-EU countries.

Information on the beneficial ownership of companies will be stored in a central register, accessible to relevant bodies such as financial intelligence units.

The directive is part of a package of EU legislative measures aimed at preventing money laundering and terrorist financing that includes Regulation (EU) 2015/847 (on the traceability of money transfers).

The directive is part of a broader EU strategy to tackle financial crime that also includes the work of:

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an Expert Group on Money Laundering and Terrorist Financing that meets regularly to exchange views and assist the European Commission in the preparation of legislation or in policy definition;
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a Committee on the Prevention of Money Laundering and Terrorist Financing that may provide opinions on implementing measures proposed by the Commission;
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an informal network of Financial Intelligence Units (the EU FIUs platform);
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the Joint Committee of European Supervisory Authorities .

As a part of this EU strategy, it also gives the Commission the task of carrying out an international assessment of the money laundering and terrorist financing risks that could affect the EU’s internal market.

Amendment to Directive (EU) 2015/849

After a series of terrorist attacks in Europe in 2016, Directive (EU) 2018/843 which amends Directive (EU) 2015/849 was adopted in 2018. The amending directive has to become law in the EU countries by 10 January 2020. The new directive tightens the EU’s rules on preventing money laundering and terrorist financing in a number of ways including:

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extending the scope of the directive to cover:
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  as well as auditors, external accountants and tax advisors, any other person who offers tax consultancy services
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  estate agents when acting as intermediaries in the letting of immovable property for which the monthly rent exceeds €10,000
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  art dealers where the value of a transaction is €10,000 or more;

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access to information on beneficial ownership thus improving transparency in the ownership of companies and trusts;
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prohibiting banks from keeping anonymous safe-deposit boxes (in addition to anonymous accounts and passbooks that were already covered by Directive (EU) 2015/849);
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addressing risks linked to prepaid cards and virtual currencies by
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  lowering the identification threshold for prepaid cardholders from the current €250 to €150 and
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  enabling national FIUs to obtain information allowing them to trace the identity of the owner of the virtual currency;

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strengthened cooperation between FIUs allowing them to share more information.

FROM WHEN DOES THE DIRECTIVE APPLY?

Directive (EU) 2015/849 has applied since 25 June 2015 and had to become law in the EU countries by 26 June 2017.

BACKGROUND

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Anti-money laundering and counter terrorist financing (European Commission)
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Terrorist financing (European Commission)
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Anti-Money Laundering and Countering the Financing of Terrorism (European Banking Authority)

KEY TERMS

Money laundering: the conversion of the proceeds of crime into apparently clean funds, usually via the financial system, for example by disguising the sources of the money, changing its form or moving the funds to a place where they are less likely to attract attention.

Terrorist financing: the supply or collection of funds intended to be used to carry out terrorist offences.

Beneficial owner: the person who ultimately owns or controls a company.

MAIN DOCUMENT

Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ L 141, 5.6.2015, pp. 73-117)

Successive amendments to Directive (EU) 2015/849 have been incorporated in the original text. This consolidated version is of documentary value only.

Contents

1.

Summary of Legislation

2.

Legislative text