The EU AML Package: Shaping the new pillars of the future EU AML/CFT framework

In-depth analysis

Introduction

In recent years, several major money-laundering scandals have shaken up the financial services industry in the European Union and indicated the EU lawmakers that the existing regulatory framework on the prevention of money laundering and terrorist financing might need some further adjustments. The divergences in national transpositions of AML Directives, together with the lack of a standardised approach to the supervision of obliged entities, have been identified as the main weak spots of the existing framework. The rapid adoption of new technological solutions in finance and the ever increasing use and popularity of crypto-assets have also drew the EU lawmakers’ attention to some emerging money laundering risks that still need to be addressed.

Driven by these recent experiences, the Commission has come up in May 2020 with the brand new Action Plan for a comprehensive Union policy on preventing money laundering and terrorist financing that has set out the main pillars for the future regulatory framework on AML/CFT.

By building on these six pillars, the Commission has published on 20 July 2021 the legislative package (the AML Package) designed to create the stronger EU regulatory and supervisory framework on AML/CFT that shall successfully tackle the risks related to money laundering and terrorist financing and bridge the identified weaknesses in national frameworks. The Commission’s package is comprised of the following four legislative proposals:

proposal for a Regulation creating an EU AML Authority (“AMLA Regulation”);
proposal for a Regulation on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing (“AML/CFT Regulation”);
proposal for a Directive establishing the mechanisms that Member States should put in place to prevent the use of the financial system for money laundering and terrorist financing purposes (“AMLD6”), and
proposal for the revision of Regulation (EU) No 2015/847 expanding traceability requirements to crypto-assets (“Revised Transfers of Funds Regulation”).