After evading settling on a concrete date for the release of the fourth Anti-Money Laundering Directive until quite recently, the directive proposal has finally seen the light of day.
It is, on the whole, consistent with the FATF recommendations of April 2012, which was largely expected.
The definition of politically exposed persons (PEPs), long a grey area in money laundering regulation, has been expanded to include domestic politicians and members of international organisations. As domestic political exposure doesn’t necessarily mean an increased risk of money laundering, this change emphasises that firms should not be relying on PEP status as the sole indicator of increased risk, rather they should be incorporating PEP checks into their holistic risk-based approach that takes a number of factors into account.
The calculation and disclosure of beneficial ownership has also been incorporated into the Commission’s proposal. A key change is around the calculation and disclosure of beneficial ownership information. New disclosure requirements mean all firms have to disclose their beneficial owners on a continual basis. While this is very useful for due diligence checks, and will considerably reduce data quality checks across the industry, it comes with a change in the calculation criteria for this measure.
The 25% beneficial owner limit remains the same, but the methodology by which this total can be achieved has been aligned across member States. A more granular approach may mean an overall increase in the number of beneficial owners that can be checked, which may have implications for the way the beneficial ownership is calculated for FATCA purposes.