It’s been a year up until this point. The European Union’s Sixth Anti-Money Laundering Directive happen to affect its member states on 3 December 2020; It will require some effort to hold up with 6AMLD. The guideline doesn’t simply alter its previous orders; Rather, it addresses determined attempts to combat financial crime, with undeniably more explicit and wide going information on what establishes money laundering offenses — and essentially more brutal ramifications for infractions.
Defining crime more comprehensively and implementing harsher penalties
6AMLD is significant in that it establishes explicit definitions of money laundering that will harmonize the list of potential offenses across the EU. There are 22 “predicate offenses’ ‘ in all, including tax evasion, environmental crimes, and, for the first time, some computer crimes.
The rule substantially broadens the regulatory framework for money laundering. The establishment of an “aiding and abetting” offense, under which guilty parties will be judged to have committed money laundering and will suffer the same financial penalties, is one such example. Currently, there is no regulation that covers these facilitators, with the focus being entirely on those who profit directly from money laundering.
In addition, 6AMLD will broaden the scope of criminal culpability. Currently, money laundering offenses may only be prosecuted against people, but the new legislation will allow for fines against “legal persons” such as corporations and partnerships. The goal is to make financial services companies more accountable for preventing money laundering; an organization will be held criminally liable unless it can demonstrate that it took reasonable steps to prevent its workers from engaging in illicit activity.
Breaching of the 6AMLD has severe consequences. In more egregious circumstances, organizations deemed responsible may face a temporary prohibition on the operation or even the possibility of permanent closure. The instruction increases the minimum jail term for money laundering offenses from one to four years for people. The courts will also have the authority to issue penalties and bar organizations from receiving public funds.
As a result, 6AMLD compels EU member states to communicate particular information in order for criminal prosecutions of related offenses to occur in several EU member states. Again, the result is to strengthen the hand of investigators and prosecutors tasked with combating money laundering — while also increasing the vulnerability of companies lacking adequate AML compliance rules and procedures.
Businesses that are regulated are subjected to additional scrutiny.
In the end, 6AMLD will have a substantial influence on banks and other regulated businesses. While the current and previous policy has targeted organizations accused of money laundering, the “bad apples” defense will no longer be valid. It will be considerably more difficult to claim that rogue personnel acted alone unless an organization can demonstrate that it took all reasonable steps to avoid their illegal behavior. In the absence of such defense, regulated enterprises will face harsh penalties if they or their employees commit misconduct.
As a result, bank CEOs and top compliance officers must assess and update their present anti-money laundering processes to ensure that they are appropriate for the new risk climate that is about to develop.
All of the organization’s anti-money laundering policies and practices should be reviewed. It may also be required to provide new employee training (and to retrain staff who have already undertaken training). They’ll need to be aware of their new obligations, which include knowing what to look for in regard to all 22 of the offenses listed in 6AMLD.
Technology will also be critical in ensuring that regulated organizations can comply with money laundering regulations in the most thorough and cost-effective manner feasible. One reaction will be to make use of regulatory technology, where new tools are always being developed.
To support transaction monitoring and other anti-money laundering activities, these solutions use technologies like data analytics, machine learning, artificial intelligence, and natural language processing. The requirement to prepare for 6AMLD gives a great chance to see what such tools can do – and, in the end, to use creative new reg tech to manage this more demanding regulatory environment.