What is the 6AMLD?
The 6th Anti Money Laundering Directive (6AMLD), also known as the Directive (EU) 2018/1673, is a piece of European Union legislation that was first introduced in October 2018. Its aim is to strengthen the EU's existing Anti-Money Laundering rules in order to better combat organized crime and terrorism.
6AMLD builds on the 5th Anti-Money Laundering Directive (5AMLD), which was introduced in 2017. With this new directive, it is an important step forward in the EU's efforts to crack down on Money Laundering and other forms of financial crime by closing loopholes and increasing transparency around beneficial ownership. Plus, it will make it easier for authorities to track down and prosecute those who are involved in such activities.
Implemented in December 2020, the directive is binding on all EU member states and will help to protect the EU's financial system from being used for criminal purposes.
What are the key changes to the 6AMLD?
In an effort to further suppress Money Laundering and other types of financial crime, the 6AMLD has introduced a number of new measures to include the following:
- A more detailed definition of predicate offences for Money Laundering, with 22 new offences introduced including cybercrime and environmental crime
- "Abiding and abetting" of Money Laundering will now also be considered a criminal offence
- Criminal liability is extended to legal persons, meaning companies can also be punished for an individual's crime if action is not taken against the criminal activity
- More consistency across the member states by increasing the punishment for Money Laundering to four years in prison and exclusion from public funding
- Member states must cooperate when it comes to dual criminality, in order to centralize criminal proceedings
What is the expanded regulatory scope of the 6AMLD?
In accordance with one of the key changes of the 6AMLD, "abiding and abetting" is a significant change that should be reviewed further as it expands the regulatory scope.
As stated above, "abiding and abetting" is now considered a criminal offence under the new directive. This means that those who assist or enable money launderers will now also be committing the crime of Money Laundering and be subject to the same punishment. Prior to this change, EU regulations only punished those who directly committed and profited from Money Laundering.
As such, firms and compliance officers need to make sure that their programs are set up to detect such actions, as they also will be considered guilty if the crimes are not reported.
Does the 6AMLD apply to the UK?
According to the 6AMLD, the United Kingdom has decided to not take part in the adoption of the directive.
The government in the UK feels that the existing legislation is for the most part compliant with the requirements of the 6AMLD, and in some cases gone further. For example, Money Laundering punishments in the UK are harsh, with prison terms between 2 and 14 years depending on the severity of the crime, while the 6AMLD has only just increased the prison time from 1 to 4 years. Furthermore, the UK has established an Unexplained Wealth Order, which requires persons to explain the source of their wealth or have their assets seized by authorities.
However, despite the UK not incorporating the 6AMLD, financial institutions within the UK that operate in Europe must review the new regulations in order to comply with European Anti-Money Laundering laws.
How does the 6AMLD affect your company?
With the 6AMLD in effect, it is important for companies to go over their compliance solutions to guarantee they are in line with the most up-to-date regulations.
This means that organizations should:
- Have an understanding of the Money Laundering definition and its 22 offences
- Reexamine criminal liability for potential Money Laundering occurrences, to include activity from senior and management employees
- Check that risk assessment is current and in compliance with the new regulations
- Make sure employees are aware and trained to meet the new obligations
- Guarantee technology solutions are equipped to meet and ensure ongoing compliance, to include enhanced due diligence for higher risk customers such as a PEP