EU Tightens Anti-Money Laundering Rules with Stronger Oversight

The European Union has adopted a sweeping package of new anti-money laundering (AML) rules aimed at better protecting the bloc's financial system from illicit funds and terrorist financing. The stricter regulations will harmonize enforcement across member states and introduce more stringent requirements for certain sectors.

Approved by the Council recently, the legislative package transfers all AML rules applying to the private sector into a new, directly applicable EU regulation. This closes potential loopholes by ensuring consistent implementation throughout the 27 member countries.

"This will ensure that fraudsters, organized crime and terrorists will have no space left for legitimizing their proceeds through the financial system," said Vincent Van Peteghem, Belgian Minister for Finance.

Key measures in the new AML regulation include:

• Extending coverage to crypto firms, luxury goods dealers, football clubs and agents
• Tighter due diligence obligations on regulated entities
• Transparent beneficial ownership reporting requirements
• €10,000 limit on cash transactions

Additionally, a new directive aims to improve how national financial intelligence units (FIUs) and supervisors coordinate AML efforts across internal borders.

The centerpiece is the establishment of a new European Anti-Money Laundering Authority (AMLA) headquartered in Frankfurt. This centralized agency will have direct supervisory powers over high-risk financial institutions, coordinating with national regulators.

AMLA can impose penalties for serious violations of the regulation's requirements by selected obliged entities. Its creation reflects the cross-border nature of financial crimes necessitating a harmonized EU response.

"The new agency based in Frankfurt will supervise the work of actors involved," Van Peteghem stated. "This will ensure...the financial system [is protected]."

The package also includes provisions granting national law enforcement direct access to centralized bank account registries via a single platform with harmonized data formats across the EU.

Financial crime fighters have praised the overhaul as significantly strengthening the EU's defenses against money laundering and illicit finance risks. However, effective implementation will require robust coordination between AMLA and national authorities.

The new AML regulation will take effect three years after entering into force, while most directive components have two to three year transposition deadlines for member states. AMLA itself is expected to commence operations by mid-2025.

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