AMLD5

What Is AMLD5?

The 5th Anti-Money Laundering Directive (AMLD5) is an update to the European Union’s (EU) Anti-Money Laundering (AML) framework. It was implemented on July 9, 2018, and required all 28 EU member countries to incorporate the update into their national laws by January 10, 2020.

An EU directive is a legal framework that establishes a common objective for each member state to achieve by including it in their own laws. While directives are not legally binding, failure to comply with them can result in fines. Despite the deadline passing, some member states have still not been able to meet the requirements of AMLD5 due to the complex regulatory challenges it presents.

AMLD5 has introduced new requirements for cryptocurrencies, Ultimate Beneficial Owner (UBO) registers, and prepaid card transaction limits. This update is expected to strengthen the EU’s anti-money laundering (AML) and combating the financing of terrorism (CFT) policies by closing loopholes that are exploited by financial criminals. It also aligns the EU’s efforts with the new FATF Standards, which were updated in June 2019 to include guidance on virtual assets and virtual asset service providers.

AMLD5 includes updates on obligated entities, such as fiat-to-crypto companies and custodian wallet service providers, customer due diligence for funds from high-risk third countries, UBO registration, and screening of Politically Exposed Persons (PEP).