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22 Jan 2025 Article

The 6th Anti-Money Laundering Directive (6AMLD): What You Need to Know

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In the wake of a series of major money laundering scandals, in July 2019, the EU Commission decided the existing Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework was ineffective.

It needed improvement, and as a result, on 20 July 2021, the Commission published a new AML/CFT legislative package – including the 6th AML Directive (6AMLD).

In this article, we’ll cover what the 6th AML Directive is, key changes in the new 6AMLD, and when the 6AMLD was implemented.

What is the 6th AML directive?

The 6th Anti-Money Laundering Directive (6AMLD) is a European Union regulation that strengthens and expands anti-money laundering (AML) efforts within EU member states.

Building on prior directives like the 5AMLD, the 6AMLD emphasises transparency and cross-border enforcement within the EU. It aims to address evolving risks in money laundering and terrorist financing, promote consistency in regulations, and increase accountability and punishments for financial crimes.

Background: What is the AML?

The AML directives were created by the European Union in response to increasing awareness of financial crime and the risks posed by money laundering and terrorist financing.

Here’s a brief history of the AML directives and how they’ve evolved.

1980s-1991: Initial steps

In the late 1980s, global authorities recognised that money laundering fuelled organised crime and drug trafficking. In 1989, the G7 countries established the Financial Action Task Force (FATF) to address this issue globally.

Following FATF’s guidance, the EU introduced its 1st AML Directive (1AMLD) in 1991, focusing on identifying and reporting suspicious transactions within the banking sector. This was the EU’s first major step towards tackling money laundering.

2001-2005: Expansion of scope

After the 9/11 attacks, concerns about terrorist financing grew. The 2nd AML Directive (2AMLD), introduced in 2001, extended AML requirements beyond banks to cover sectors like law, accounting, and real estate.

In 2005, the 3rd AML Directive (3AMLD) aligned the EU’s rules more closely with FATF standards. It required customer identification, beneficial ownership transparency, and due diligence for high-risk clients.

2015: Focus on transparency

In response to the 2008 financial crisis, the 4th AML Directive (4AMLD) targeted tax evasion and corruption. It required EU states to create centralised registers of beneficial ownership to improve company ownership transparency. The directive also tightened customer due diligence (CDD) and introduced stricter rules for politically exposed persons (PEPs).

2018: Tackling emerging risks

In response to growing threats from terrorism and cybersecurity risks, the 5th AML Directive (5AMLD) extended AML requirements to cryptocurrency providers, prepaid cards, and art dealers, aiming to reduce financial anonymity. Following the 2016 Panama Papers leak, the 5AMLD also required member states to create public beneficial ownership registers to boost transparency.

2021: Increasing accountability and penalties

The 6th AML Directive (6AMLD) standardised the definition of money laundering across EU states, expanded the list of offences, and held both individuals and legal entities criminally accountable. It introduced stricter penalties and encouraged cross-border cooperation among EU states.

Looking ahead, the EU plans further enhancements with proposals for a 7th AML Directive and a dedicated EU AML Authority (AMLA) to enhance enforcement and coordination across member states.

You might also be interested in: ‘All About Know Your Customer (KYC)’

Key changes in the new 6AMLD

The 6AMLD introduces several key changes designed to strengthen AML regulations across the EU.

The most notable changes in the 6AMLD include:

  • Expanded list of predicate offences: The 6AMLD broadens the list of predicate offences (the original crimes the laundered money came from) to include a wider range of crimes – e.g. cybercrime, tax crimes, and environmental crimes – making it harder to use these activities to generate ‘clean’ money.
  • Standardised definition of money laundering offences: The 6AMLD provides a clear and standardised definition of money laundering offences across the EU. This ensures all member states apply the same criteria.
  • Criminal liability for legal entities: The 6AMLD holds legal entities accountable for money laundering offences, meaning companies – not just individuals – can face legal consequences for fuelling or failing to prevent money laundering within their operations.
  • Increased minimum penalties: The directive introduces stricter minimum penalties for those convicted of money laundering offences, setting a minimum imprisonment of four years.
  • Dual criminality for predicate offences: The provision allows prosecution of money laundering even when the predicate offence was committed outside the EU, as long as the act is also illegal in the country where the prosecution is taking place, strengthening the EU’s ability to prosecute cross-border financial crime.
  • Enhanced cooperation and information sharing: The 6AMLD promotes closer collaboration between EU member states, improving information-sharing practices to combat money laundering in cross-border cases.
  • Focus on emerging risks and new technologies: The directive sets the stage for tackling risks associated with new technologies and financial tools, such as cryptocurrencies, that may be exploited for laundering.

Overall, these key changes aim to improve regulatory consistency, enhance accountability, and create a more robust legal framework to combat evolving money laundering threats across the EU.

When was the 6th AML directive implemented?

The 6AMLD officially came into effect on 3 December 2020. EU member states were required to implement 6AMLD into their national laws by 3 December 2020, and financial institutions were required to comply with the new regulations by 3 June 2021.

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