The EU's 4th Directive on Anti-Money Laundering MLD4 succeeds the 3rd Directive of 2005. MLD4 must be enacted by member states and obliged entities must comply with the Directive.
AML4 is due to be transposed into Irish Law by the end of the 2017. The Department of Justice have drafted and published a detailed general scheme of legislation and indications are that the heads of legislation may be published over the coming months as the Criminal Justice (Money Laundering and Terrorist Financing)(Amendment) Bill. It appears the aim is to publish the Bill by September 2017. Enactment of the Bill would then be subject to Oireachtas timeframes.
What's New In MLD4?
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Obliged Entities must define the risk level of a customer before determining whether to conduct Standard Due Diligence (SDD) or Enhanced Due Diligence (EDD) for their customers.
The above effectively introduces a new level of Due Diligence - a requirement that Enhanced Due Diligence be performed in situations where the risk may be deemed higher.
Obliged Entities will be required to review their customer registers to ascertain if they need to apply Enhanced Due Diligence to any existing customers as PEPs under the new definition, as well as applying these measures to new customers at take-on stage.
Enhanced Due Diligence includes screening for...
Obliged entities must be able to evidence the rationale behind the risk rating applied to each customer.
A politically exposed person (PEP) is an individual who is or has been entrusted with a prominent public function.
Many PEPs hold positions of influence and as a result carry a greater risk, if their influence is abused for the purpose of money laundering, corruption or bribery.
Not only this, but any close business associates or family member of these people will also be deemed as being a risk and therefore could also be added to the PEP list.
As part of the new Directive, the definition of PEPs will be extended to include domestic PEPs i.e. those in prominent public functions or in positions with organisations here in Ireland.
Obliged Entities are required to take steps to identify individuals holding over 25% of the shares of a Company and perform necessary Due Diligence checks.
Obliged Entities will need to ensure that their details for Beneficial Owners of Companies are accurate and up-to-date.
Obliged entities are already required to evidence that they have taken steps to identify, assess, understand, and mitigate AML risk.
Vision-net has developed products in conjunction with leading anti-money laundering solutions providers to make cost-effective, fully comprehensive Standard and Enhanced Due Diligence and Ultimate Beneficial Owner checks available.
There are a range of penalties with regard to non-compliance of the new legislation. For breaches by credit or financial institutions, the maximum penalties are at least 5 million euro or 10% of the total annual turnover of the organisation.
Evidence of CDD documentation after the business relationship has ended is set at 5 years.
ON GOING MONITORING
Risk assessments must be kept up-to-date. PEPs should be assessed up to 18 months after ceasing their public function.