New AML Regulation Comes Into Force

On 9 July 2024, Regulation (EU) 2024/1624 on the prevention of the use of the financial system for money laundering or terrorist financing (AMLR) came into effect. The AMLR is part of a comprehensive AML package designed to strengthen the European Union’s framework for anti-money laundering and countering the financing of terrorism (AML/CFT).

What's New

While not exhaustive, the key updates introduced by the AMLR are as follows:

• Direct Applicability: One of the main challenges with the current AML Directive (AMLD4) has been its lack of direct applicability, leading to a fragmented approach across Member States. The AMLR will be directly applicable, ensuring greater harmonisation of the AML/CFT framework throughout the EU. It incorporates and modernises the requirements established under AMLD4 (as implemented into national laws), becoming the cornerstone of the new regime.
• New Obliged Entities: The AMLR extends AML/CFT rules to new obliged entities, such as traders in precious metals and stones, as well as other high-value and luxury goods (including jewellery, clocks, and watches valued over EUR 10,000), crypto-asset service providers, football clubs and agents, and all crowdfunding platforms and intermediaries. Some of these entities are already covered by national AML legislation (e.g., football clubs and agents in Belgium).
• Enhanced Customer Due Diligence (CDD) Requirements: The AMLR builds on and strengthens the existing CDD requirements set out in AMLD4. Key changes include lowering the EU-wide threshold for CDD on occasional transactions from EUR 15,000 to EUR 10,000 (a threshold already applicable in Belgium), introducing limited CDD measures for occasional cash transactions of at least EUR 3,000, and requiring crypto-asset service providers to apply limited CDD measures for occasional transactions valued below EUR 1,000.
• Limit on Cash Payments: The AMLR imposes a Union-wide limit of EUR 10,000 on cash payments to reduce the risks associated with cash transactions. This limit applies to single transactions as well as multiple linked transactions. Member States may implement lower limits; existing national limits below EUR 10,000 (such as the EUR 3,000 limit in Belgium) must remain in force.
• Beneficial Ownership: The AMLR harmonises and clarifies the rules on beneficial ownership. The threshold for holding an ownership interest in a legal entity remains at 25% or more of shares or voting rights. However, the AMLR provides for the European Commission to potentially lower this threshold to a maximum of 15% for certain categories of corporate entities after an assessment period ending on 10 July 2029.
• Additional provisions of the AMLR cover the identification of high-risk third countries, cross-border correspondent relationships, the definition of politically exposed persons, and the internal organisation (policies, procedures, and controls) required for obliged entities.

What's Next

The AMLR will apply as of 10 July 2027, with the exception of professional football clubs and football agents, for whom it will apply from 10 July 2029. Local AML legislations will need to be amended or repealed, as the AML/CFT rules will now be incorporated into the AMLR and be directly applicable across all Member States.

What This Means for You

Obliged entities should actively prepare for the entry into application of the AMLR as of 10 July 2027 and ensure their AML/CFT frameworks are fully compliant with the new rules. Our experts are available to assist with this process. Please do not hesitate to contact us with any questions.

About the AML Package

In addition to the AMLR, the AML package includes:

• AMLD6: Directive (EU) 2024/1640 on the mechanisms to be put in place by Member States for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. This new directive sets rules concerning the establishment and access to beneficial ownership registers, the responsibilities of national FIUs, and cooperation between competent authorities. Member States must implement AMLD6 by 10 July 2027 (with some exceptions).
• AMLA Regulation: Regulation (EU) 2024/1620 establishing the Authority for Anti-Money Laundering and Countering the Financing of Terrorism. This new supranational AML authority, based in Frankfurt, will supervise high-risk obliged entities in the financial sector, support the non-financial sector, and coordinate with FIUs. The AMLA Regulation came into force on 26 June 2024 and will apply from 1 July 2025 (with some exceptions).

The texts of the AMLR, AMLD6, and AMLA Regulation were published in the Official Journal of the European Union on 19 June 2024.