The sixth European Anti-Money Laundering Directive (Directive (EU) 2018/1673 on combatting money laundering by criminal law – 6AMLD) was adopted on 12 November 2018. This Directive complements the Fifth Anti-Money Laundering Directive (5AMLD), which was adopted in the same year. EU member States were required to harmonize their national AML/CFT legislation under the 6AMLD provisions by the summer of 2021.
AMLD6 aims to close loopholes in anti-money laundering (AML) measures in EU member states, increasing the scope of liability for those found guilty of wrongdoing.
Under AMLD6, criminal liability can be applied to “legal entities” such as companies and partnerships. Firms may be criminally liable for the actions of employees engaged in criminal activities. The purpose of this provision is to force financial services companies to take on more responsibility for combating money laundering.
6AMLD develops the concept of “predicate” (prior) crime, introduced in the AML standard at the initiative of the FATF international organization back in 2012. This concept refers to a crime that results in a person receiving criminal income, and, therefore, serves as the basis for the obligation of all AML entities to track not only directly criminal income, but also income obtained by criminal means at the previous stage of the movement of funds.
According to the Directive, initiators of crimes, accomplices and instigators are considered accomplices, and aiding, abetting and “self-laundering” are now also considered criminal offenses. EU States are required to make aiding, abetting and attempting to commit a crime (“aiding, abetting and attempting”) a criminal offence.
An innovation of 6AMLD is also the establishment of the obligation of EU member States to consider the legalization of their own income (“self-laundering”) as a crime in the field of money laundering. This type of crime occurs when actions aimed at legalizing criminal proceeds are carried out by a person who has committed a predicate crime, in particular, by transferring property obtained as a result of criminal activity into circulation and thus concealing its illegal origin. A practical example is the use of “fake” companies to hide the profit of an organization from taxation and non-payment of VAT, followed by the purchase of various goods and services, property.
The Sixth EU Directive also covers the issue of double criminalization, requiring Member States to recognize certain “predicate” crimes discussed above, even if they do not constitute a violation of the law in that jurisdiction. 6AMLD sets out a number of factors that authorities should consider when deciding how and where to prosecute, including the victims ‘ country of origin, the nationality (or domicile) of the offender, and the jurisdiction in which the offence was committed. 6AMLD sets out a number of factors that authorities should consider when deciding how and where to prosecute, including the victims ‘ country of origin, the nationality (or domicile) of the offender, and the jurisdiction in which the offence was committed.
New EU directives on countering money laundering and the financing of terrorism are currently expected to be adopted. Financial oversight by regulators will only increase, so we recommend that organizations respond to these changes in advance with real actions, such as retraining their regulatory compliance staff and reviewing their current KYC and KYB processes.