On June 19, 2018, the Official Journal of the European Union (EU) published the Fifth Anti-Money Laundering Directive (5MLD) that includes amendments to resolve issues within the existing Fourth Anti-Money Laundering Directive (4MLD), including terrorist financing, tax leaks and the introduction of cryptocurrencies. It also maintains an understanding of all new technological advances. All new amendments to the 5MLD must be implemented by January 2020.
5MLD expands upon 4MLD by allowing for virtual currency exchange platforms to be more intensely regulated. The new directive indicates specific risk within money laundering and tax evasion schemes which ultimately lowers the threshold for financial crime to occur. It also permits Member States to make beneficial registers public and available through online registration and promotes transparency between business and state by requiring discrepancies to be reported and listed in the central registers. In addition, 5MLD will ensure that proper due diligence systems are put in place within financial institutions and individual entities. The centralized mechanisms will allow for identification of any natural or legal persons holding or controlling payment accounts and bank accounts held by a credit institution within their territory, and secure information.
Overall, 5MLD provides solutions to issues that came from the previous 4MLD. The new measures and amendments made have the potential to prevent money laundering, terrorist financing, and other illicit activity. With improved due diligence systems and greater regulation through reports, 5MLD will also allow for member states of the EU to polish its regulatory structure.
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