A number of new sectors now fall under the scope of the 5th Money Laundering Directive, and will now become ‘obliged entities’
New sectors include:
- Virtual Assets (VAs) – cryptocurrencies, digital tokens and other forms of digital value representation
- Virtual Asset Service Providers (VASPs) – exchanges, digital wallet providers and all services which support VAs
- Art Traders – where the value of the transaction exceeds 10,000 Euros.
In certain areas of Europe, professional service providers that were previously out of the scope of the 4th Money Laundering Directive (4MLD) will now be included, such as estate agents, law firms, company service providers and accountants. However, in the UK these sectors were already in scope.
Virtual Assets, Virtual Asset Service Providers and Art Dealers who were not previously under money laundering regulatory scope will now need to ensure they embed robust AML/CTF processes to comply with anti money laundering legislation when onboarding their clients.
With these sectors now formally classified as higher risk, all newly regulated firms will now need to carry out a risk assessment to understand the risks in their individual business. The European Supervisory Authorities (ESA) has announced new guidelines around identifying risk factors that should help. Each firm will then need to conduct appropriate Customer Due Diligence checks on both new and existing customers (in the case of virtual assets this will require screening of both the sender and the beneficiary). Training will be required for staff, and the firm’s Senior Management will need to engage with all new policies.
If you are new to AML legislation, take the opportunity to review your customer onboarding and monitoring process, and consider changing to automated solutions making them as efficient as possible, avoiding administrative overload.