Recent developments in the EU: anti-money laundering

Following three-way talks between the European Parliament, the Italian Council Presidency and the Commission, a draft Fourth AMLD text was agreed in the early hours of 17 December. This directive revises and repeals the Third AMLD (2005/60/EC), and aims to prevent the use of the financial system for the purpose of money laundering and terrorist financing within the EU.

Under the agreed text, member states will be required to maintain central registers detailing the beneficial owners of corporate and other legal entities, including trusts, based on their territory, but the registers shall not be required to be publicly accessible.

Full access to company beneficial ownership data will be granted to competent authorities and their financial intelligence units (without any restriction), to “obliged entities” (such as banks conducting their “customer due diligence” duties), and to members of the public who can show a “legitimate public interest”, such as investigative journalists, NGOs and other concerned citizens. In respect of trusts, information will be collected in closed centralised registers available only to government bodies and will not be available to the public.

Registered information will include the owners’ names, country of residence, month and year of birth, and the nature and extent of the beneficial interest held.

The European Parliament’s initial position included a provision to have beneficial ownership data available in national public registries, which could in the case of UK trusts and their predominant use for private family arrangements have caused significant problems in respect of the right to a private life under article 8 ECHR and data protection rules. MEPs are understood to have included a number of new provisions to protect personal data in the agreed text. The directive also apparently places a requirement on lawyers, among others, to be more vigilant about suspicious transactions made by their clients.

The agreed text must still be endorsed by a number of committees, before being put to a vote by the full Parliament in early 2015.

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