- by Ian Finnie on 26/09/2016
The 4th Directive must be incorporated into national laws of Member States by June 2017 and obliged entities (financial institutions, accountants, tax advisers and so on) must comply with the Directive from that date as well.
Risk Based Approach
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.
Where the risk is deemed higher a new level of Due Diligence - Enhanced Due Diligence is required.
Enhanced Due Diligence
EDD needs to be applied to existing customer base.
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.
An individual who is entrusted with a prominent public function.
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 4TH Directive, the definition of PEPs will be extended to include domestic PEPs i.e. Irish residents in prominent public functions or in positions with organisations here in Ireland.
MLD4 required that obliged entities continue to identify individuals holding over 25% of the shares of a Company and perform necessary Due Diligence checks.
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Obliged entities are already required to evidence that they have taken steps to identify, assess, understand, and mitigate AML risk.
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For further information on Compliance under MLD4 please don't hesitate to get in touch with us on email@example.com or call our compliance specialists today on Tel:01 903 2660
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