AML Directives

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The third EU AML Directive came into force for EU member states on 15 December 2007. It resulted from the Financial Action Task Force’s (FATF)previous review of its 40 Recommendations as well as its introduction of the nine Special Recommendations on Terrorist Financing.

The Third EU AML Directive deals with both terrorist Financing and Money Laundering. It also provides more detail surrounding ‘Customer Due Diligence (CDD)’ requirements. These are:

• Requirement to not only identify and verify the customer but to also identify the purpose and intended nature of the business relationship.

• Requirement for on-going monitoring of the business relationship and transactions

• CDD to apply to both new and existing customers

• Requirement to identify and verify the beneficial owners of the customer and to know and understand the control structure

• Exemption for Simplified CDD for certain customers and products

• Requirement to undertake Enhanced Due Diligence in higher risk situations. These would include ‘non-face to face customers, Correspondent Banking relationships in ‘Non-EU or Non Country of Equivalence’ countries

This Directive recognised the concept of a risk-based approach to anti-money laundering and counter terrorist financing. However, it also introduced explicit obligations on institutions to have appropriate and robust systems and controls to both comply with the law and to demonstrate compliance with the law. From a country point of view it also created obligations on the reporting of statistics of suspicious activities and relationships with Financial Intelligence units.

The third EU AML Directive was transposed into Irish Law by the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010.

To view the Third EU AML Directive click here

 First EU AML Directive

 This was a basic Directive that implemented the original FATF 40 recommendations. It dealt solely with Money Laundering from the proceeds of drug related crimes and did not include terrorist Financing. It also only applied to certain financial institutions.

 Second EU AML Directive 

This Directive was implemented in 2001 and broadened the types of offences as well as the categories of institutions that it applied to. It also extended the obligations to gatekeepers including lawyers, accountants, auditors, tax advisers, Estate agents, trust or company service providers as well as casinos, auctioneers and dealers in high value goods.