AMLR: Regulation (EU) 2024/1624
The European Anti-Money Laundering Regulation (AMLR), formally known as Regulation (EU) 2024/1624, marks a milestone in the European Union’s efforts to combat money laundering (ML) and terrorist financing (TF).
Adopted on 31 May 2024, this regulation establishes a harmonized and directly applicable legal framework across all EU Member States, replacing fragmented national approaches under prior directives. AMLR is a critical part of the EU’s broader strategy to strengthen the resilience of the financial system against criminal misuse.
Recitals – Goals
- Purpose: Address weaknesses in prior AML/CFT frameworks by harmonizing rules and ensuring uniform application across Member States.
- Global Alignment: Aligns EU standards with Financial Action Task Force (FATF) recommendations to maintain global AML/CFT leadership.
- Risk-Based Approach: Introduces proportionate measures tailored to the specific risks faced by different sectors and obliged entities.
- Emerging Risks: Expands coverage to include crypto-assets, crowdfunding platforms, and high-value goods dealers, reflecting evolving financial and technological landscapes.
- Transparency and Oversight: Strengthens beneficial ownership transparency and creates the European Anti-Money Laundering Authority (AMLA) to oversee implementation and ensure consistency.
Articles – To Do’s
Chapter I – General Provisions
Section 1 – Subject Matter and Definitions
Article 1 – Subject Matter
Implement a harmonized framework to combat money laundering (ML) and terrorist financing (TF) across the EU.
Article 2 – Definitions
Familiarize your organization with AMLR definitions, including obliged entities, beneficial owners, and politically exposed persons (PEPs).
Section 2 – Scope
Article 3 – Obliged Entities
Identify whether your organization is an obliged entity under AMLR (e.g., financial institutions, crypto-asset providers).
Article 4 – Exemptions for Low-Risk Financial Activities
Assess eligibility for exemptions based on low-risk financial activities and document justifications.
Article 5 – Exemptions for Non-Profit Organizations
Review compliance obligations for non-profits and apply for exemptions where applicable.
Article 6 – Exemptions for High-Value Goods Dealers
Evaluate your high-value goods transactions to determine if they qualify for exemptions.
Article 7 – Prior Notification for Exemptions
Notify your competent authority before applying exemptions, ensuring full compliance.
Section 3 – Cross-Border Provisions
Article 8 – Notification of Cross-Border Risks
Report cross-border ML/TF risks to AMLA and national authorities, maintaining detailed records of identified threats.
Chapter II – Internal Policies, Controls, and Procedures
Section 1 – Internal Policies and Risk Management
Article 9 – Scope of Internal Policies
Develop internal AML/CFT policies tailored to your business model and sector-specific risks.
Article 10 – Business-Wide Risk Assessment
Conduct and document a comprehensive risk assessment covering all operations.
Article 11 – Compliance Functions
Appoint a qualified Compliance Officer and define their responsibilities within the organization.
Article 12 – Awareness of Employees
Implement regular AML/CFT training for all employees, focusing on risk awareness.
Article 13 – Integrity of Employees
Screen employees in sensitive roles to ensure their integrity aligns with AMLR standards.
Article 14 – Reporting of Suspicious Transactions
Establish procedures for identifying and reporting suspicious activities to the Financial Intelligence Unit (FIU).
Article 15 – Situation of Non-Compliance
Develop an escalation process for addressing non-compliance and notifying relevant authorities.
Section 2 – Provisions Applying to Specific Sectors
Article 16 – Group-Wide Policies
Ensure consistency in AML/CFT policies across all branches and subsidiaries, adapting for local regulations.
Article 17 – Branches and Subsidiaries in Third Countries
Apply equivalent AML/CFT measures in third-country operations, even if local laws differ.
Section 3 – Outsourcing
Article 18 – Outsourcing
Draft contracts for outsourced AML/CFT functions, detailing roles, monitoring, and compliance requirements.
Chapter III – Customer Due Diligence (CDD)
Section 1 – General Provisions
Article 19 – Application of CDD
Identify scenarios requiring CDD (e.g., establishing business relationships, large transactions).
Article 20 – Customer Due Diligence Requirements
Collect and verify customer identity, beneficial ownership, and transaction purpose.
Article 21 – Inability to Comply with CDD
Terminate business relationships where CDD cannot be completed and report to the FIU.
Article 22 – Identification and Verification of Customers
Use reliable and independent documentation for customer verification.
Article 23 – Timing of the CDD Measures
Complete CDD before initiating transactions or establishing relationships.
Article 24 – Reporting of Discrepancies
Notify central registers of discrepancies in beneficial ownership information.
Article 25 – Identification of Beneficial Ownership
Trace and verify the ultimate beneficial owner for all clients.
Article 26 – Ongoing Monitoring of Business Relationships
Continuously monitor transactions to ensure consistency with the customer profile.
Article 27 – Temporary Measures During CDD
Implement temporary risk controls while completing CDD.
Article 28 – Regulatory Reporting of CDD Failures
Notify authorities when CDD cannot be conducted.
Section 2 – Third-Country Provisions
Article 29 – Identification of High-Risk Third Countries
Monitor AMLA’s list of high-risk countries and apply EDD for related transactions.
Article 30 – Identification of Equivalent Jurisdictions
Leverage reduced CDD measures for jurisdictions deemed equivalent.
Article 31 – Identification of Non-Cooperative Jurisdictions
Apply enhanced scrutiny for transactions involving non-cooperative jurisdictions.
Article 32 – Guidelines on Money Flows
Implement AMLA’s guidelines for monitoring cross-border money flows.
Section 3 – Simplified Due Diligence (SDD)
Article 33 – Simplified Due Diligence
Apply simplified due diligence (SDD) measures where risks are demonstrably low.
Document criteria for SDD applicability, such as low-risk customer profiles, products, or jurisdictions.
Section 4 – Enhanced Due Diligence (EDD)
Article 34 – Scope of Enhanced Due Diligence
Implement enhanced due diligence (EDD) measures for high-risk scenarios, such as transactions involving high-risk third countries or politically exposed persons (PEPs).
Article 35 – Countermeasures to High-Risk Countries
Apply additional countermeasures for transactions involving high-risk jurisdictions, such as:
Limiting or terminating business relationships.
Heightened monitoring and reporting requirements.
Article 36 – Specific Enhanced Measures for High-Risk Transactions
Conduct additional verifications for high-value or high-complexity transactions.
Investigate the source of funds and purpose of the transaction.
Article 37 – Specific Enhanced Measures for High-Value Assets
Apply enhanced monitoring for transactions involving high-value goods like art, luxury cars, or yachts.
Article 38 – Specific Measures for Crypto-Asset Providers
Introduce enhanced customer verification measures for crypto-asset transactions.
Implement stricter monitoring of wallet holders and transaction patterns.
Article 39 – Prohibition of Relationships with High-Risk Countries
Avoid or terminate relationships with entities or individuals in countries designated as high-risk.
Article 40 – Measures to Mitigate Risks from Non-Cooperative Countries
Implement additional controls, such as requiring approval for high-risk transactions.
Increase reporting frequency for activities involving non-cooperative countries.
Article 41 – Specific Provisions for Charitable Organizations
Conduct enhanced due diligence for charities operating in high-risk areas or managing large cross-border donations.
Article 42 – Specific Provisions for Financial Institutions
Apply sector-specific EDD measures for financial institutions, including correspondent banking relationships.
Article 43 – List of Prominent Public Functions
Refer to AMLA’s updated list of politically exposed persons (PEPs) and ensure the list is integrated into your risk management systems.
Article 44 – Politically Exposed Persons (PEPs)
Conduct enhanced due diligence for PEPs, including verifying the source of funds and wealth.
Monitor ongoing transactions involving PEPs and their associates.
Section 5 – Specific Customer Situations
Article 45 – Measures for PEPs Ceasing Functions
Continue enhanced monitoring for former PEPs for an appropriate period based on residual risk.
Article 46 – Family Members and Close Associates of PEPs
Apply EDD measures to immediate family members and known associates of PEPs.
Article 47 – Specifications for High-Risk Customer Profiles
Establish specific protocols for handling high-risk customers, such as trusts, complex ownership structures, or accounts for non-profits.
Section 6 – Reliance on Third Parties
Article 48 – General Provisions on Third-Party Reliance
Verify the AML/CFT compliance of third parties relied upon for customer due diligence (CDD).
Document third-party agreements and ensure oversight mechanisms are in place.
Article 49 – Process of Reliance on Third Parties
Ensure third-party due diligence meets AMLR requirements.
Conduct regular audits of the third party’s compliance processes.
Article 50 – Guidelines on Third-Party Reliance
Follow AMLA’s guidelines to determine when and how third-party reliance is appropriate.
Chapter IV – Beneficial Ownership
Article 51 – Identification of Beneficial Owners
Identify and verify the ultimate beneficial owners (UBOs) of legal entities and arrangements.
Maintain accurate records of ownership and control structures.
Article 52 – Beneficial Ownership Transparency
Ensure that beneficial ownership data is transparent and accessible to relevant authorities.
Report discrepancies in ownership information to the central register.
Article 53 – Beneficial Ownership Verification
Implement robust processes to verify the accuracy of beneficial ownership data provided by customers.
Use independent and reliable sources for verification.
Article 54 – Coexistence of Ownership Structures
Document and assess all ownership structures within complex or layered entities to identify the true beneficial owner.
Article 55 – Ownership Thresholds
Apply the defined threshold (e.g., 25% ownership or control) to determine beneficial ownership.
Ensure thresholds are consistently applied across all jurisdictions.
Article 56 – Notifications
Notify competent authorities of discrepancies between declared and verified beneficial ownership information.
Article 57 – Identification of Beneficial Owners of Legal Entities Identify and verify beneficial owners of all legal entities your organization interacts with.
Ensure the beneficial owner is the individual with ultimate ownership or control, following AMLR thresholds.
Article 58 – Identification of Beneficial Owners of Trusts
Obtain and verify information on the settlor, trustee(s), protector (if applicable), beneficiaries, and any other individual exercising control over the trust.
Maintain records of all verified individuals and their roles within the trust.
Article 59 – Identification of Beneficial Owners of Foundations
Identify the founder, members of the board of directors, and any other persons with control over the foundation.
Apply enhanced due diligence (EDD) measures for high-risk foundations or those operating in high-risk jurisdictions.
Article 60 – Identification of Beneficial Owners of Other Legal Arrangements
Determine the beneficial owners for any other legal arrangements similar to trusts and foundations, following AMLR criteria.
Document the ownership or control structure to ensure transparency.
Article 61 – Identification of Beneficial Owners in Cross-Border Transactions
Apply stricter identification and verification measures for beneficial owners in cross-border transactions, particularly when involving high-risk jurisdictions.
Report discrepancies between declared and verified beneficial ownership information to relevant authorities.
Article 62 – Beneficial Ownership Registers
Ensure compliance with requirements for reporting beneficial ownership information to national registers.
Use the EU-wide interconnected system for accessing and updating ownership data.
Article 63 – Obligations of Corporate Entities
Maintain up-to-date records of beneficial ownership within your organization.
Submit ownership data promptly to relevant authorities when requested.
Article 64 – Trustee Obligations
Identify and disclose beneficial ownership for all trusts managed by your organization.
Provide ownership information to authorities as required.
Article 65 – Exceptions to Beneficial Ownership Requirements
Determine whether your organization qualifies for exceptions under AMLR and document these justifications.
Article 66 – Nominee Obligations
Regulate the use of nominee directors or shareholders to prevent misuse for concealing ownership.
Article 67 – Foreign Legal Entities
Apply enhanced scrutiny to beneficial ownership of foreign entities operating in the EU.
Ensure equivalent AML/CFT standards are met.
Article 68 – Penalties for Non-Compliance
Establish internal processes to avoid breaches of beneficial ownership obligations.
Regularly review compliance to prevent fines or sanctions.
Chapter V – Reporting Obligations
Article 69 – Reporting of Suspicious Transactions
Develop procedures for detecting and reporting suspicious transactions to Financial Intelligence Units (FIUs).
Train employees on identifying red flags and escalation protocols.
Article 70 – Specific Provisions for High-Risk Transactions
Implement stricter monitoring and reporting for transactions involving high-risk countries, sectors, or entities.
Article 71 – Refraining from Conducting Transactions
Establish policies to pause or terminate transactions when ML/TF is suspected until a report is filed with the FIU.
Article 72 – Disclosure to FIU
Ensure complete and timely disclosure of suspicious activity reports (SARs) to the FIU.
Article 73 – Prohibition of Tipping-Off
Train employees on the prohibition of informing customers about SARs or investigations to maintain confidentiality.
Article 74 – Threshold-Based Reporting
Identify cash or electronic transactions exceeding specified thresholds and report them accordingly.
Maintain accurate transaction records to ensure compliance.
Chapter VI – Information Sharing
Article 75 – Exchange of Information
Facilitate secure information sharing between obliged entities and authorities while safeguarding confidentiality.
Chapter VII – Data Protection and Record Retention
Article 76 – Processing of Personal Data
Align data collection and processing practices with GDPR while ensuring compliance with AML/CFT requirements.
Article 77 – Record Retention
Retain all CDD and transaction records for a minimum of five years.
Extend retention periods for ongoing investigations if necessary.
Article 78 – Provision of Records
Ensure all retained records are readily accessible and can be provided promptly to authorities upon request.
Chapter VIII – Measures to Mitigate Risks
Article 79 – Anonymous Accounts and Transactions
Close existing anonymous accounts and prohibit the opening of new ones.
Conduct CDD for all accounts to eliminate anonymity.
Article 80 – Limits to Large Cash Transactions
Implement policies to cap cash transactions involving high-value goods at EUR 10,000.
Chapter IX – Final Provisions
Section 1 – Cooperation Between Authorities
Article 81 – Cooperation Between Competent Authorities
Establish protocols for sharing information with other Member States’ authorities.
Article 82 – Requests for Information
Respond promptly to requests for information from competent authorities in other jurisdictions.
Section 2 – Cooperation Between Member States and EU Bodies
Article 83 – Cooperation Between Member States and AMLA
Collaborate with AMLA to ensure consistent implementation of AML/CFT measures.
Article 84 – Requests for Support from AMLA
Utilize AMLA’s technical support to address compliance challenges.
Section 3 – Other Provisions
Article 85 – Exercise of Delegated Powers
Monitor updates to delegated powers by the European Commission for regulatory changes.
Article 86 – Committee Procedure
Participate in stakeholder consultations on technical standards where applicable.
Article 87 – Review
Prepare for periodic reviews of compliance effectiveness, as mandated by AMLR.
Article 88 – Reports
Submit annual reports summarizing AML/CFT activities and risks to the relevant authority.
Article 89 – Relation to Other Legislation
Align internal policies with other EU regulations to ensure consistency.
Article 90 – Entry Into Force and Applicability
Prepare for AMLR enforcement within the stipulated timeframe after its publication.
Annexes – Risk Factors
Annex I – Indicative List of Risk Variables: Outlines variables for assessing ML/TF risks, including customer type, product characteristics, and delivery channels.
Annex II – Lower Risk Factors: Lists scenarios suitable for Simplified Due Diligence (SDD), such as low-value products or customers from low-risk jurisdictions.
Annex III – Higher Risk Factors: Defines cases requiring Enhanced Due Diligence (EDD), including transactions involving high-risk countries or politically exposed persons (PEPs).
Annex IV – List of High-Value Goods: Includes art, jewelry, luxury vehicles, and real estate, which are subject to AML/CFT obligations.
Annex V – Precious Metals: Lists precious metals like gold and silver, recognized for their potential misuse in illicit financial activities.
Annex VI – Correlation Table: Maps provisions in AMLR 2024 to previous directives, aiding the transition to the new regulatory framework.
proAFC – Offer from Leitner & Associates
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