Money-laundering dominates both headlines and the list of growing concerns for EU regulated companies.
Recently, Standard Chartered were fined $1.1bn for money laundering and sanction breaches. Almost immediately after, Unicredit were fined $1.3bn. In the same week, Latvia’s Prime Minister promised to overhaul the banking sector in an attempt to combat growing fears over the number of money laundering scandals.
Events such as these are driving governments to search for transnational solutions to the growing problem. By December 2020, the fight against money laundering by the European Parliament will step up a gear as the Sixth Anti-Money Laundering Directive (6AMLD) becomes fully transposed into law across all EU countries. Regulated entities operating within the zone will then have until June 2021 to implement relevant regulations.
It is critical that concerned companies familiarise themselves with 6AMLD and the implications for compliance processes, as well as the future growth opportunities.
The Directive provides a harmonised definition of money laundering offences, aimed at removing loopholes in weak domestic legislation. The 22 predicate offences now include cybercrime and environmental crime, a reflection of the changing nature of the threat landscape and shifting priorities within the European Union. To help understand the risk factors and classifications to look out for, compliance officers should familiarise themselves with the 22 predicate offences as listed in the new Directive.
In addition to those converting the proceeds of crime, the scope of money laundering now includes “aiding and abetting”. By including this group of people, often known as “enablers” it will be easier to go after the people who act as accomplices in the money laundering process.
It is not just the individual that can be punished. One of the most significant changes under the new Directive is the extension of criminal liability to legal persons (i.e. companies or partnerships) where they failed to prevent the illegal activity conducted by a ‘directing mind’ within the company. Even if the criminal activity that generated illicit funds cannot be identified, an individual or legal person can be convicted.
Conviction is another area that has been amended in this latest directive. All states will have to set a maximum imprisonment of at least four years for money laundering offences. This is an increase from one year, as it was previously. Any sentence may be supplemented with ‘effective, proportionate and dissuasive sanctions’ which can be combined with fines. This includes the full shut-down of a business.
Companies would be wise to view compliance as something that can enable rather than hinder business practices. Staying focused on managing the increasingly complex area of compliance with leading data and technology solutions. Innovation is the only way companies and individuals can reduce their risk exposure to the growing threat that is money laundering.
This Newsmaker has been deemed by this Newsroom as having a specialized knowledge of the subject covered in this article.