MLD5: at a glance
And what you need to know now
The changes brought about by the Fifth Anti-Money Laundering Directive (EU) 2018/843 (the MLD5) took effect on 10 January 2020 in the UK well before the planned UK’s exit from the European Union. The said legislation has widened its scope, bringing in letting agents, art dealers and crypto-currencies within the ambit of the regime. Thus, the regime is now extended to those in the business of custodian wallet and exchange services between virtual currencies and fiat currencies, businesses engaged in trading works of art amounting to €10,000 or more, tax advisory and consulting services, and estate agencies. The new legislation also extended the prohibition of keeping anonymous accounts and passbooks, which was previously applicable to service providers and credit institutions, to those offering anonymous safe deposit boxes as well.
‘Businesses, more than ever, need to conduct CDD measures to those transactions that were previously within the low-risk threshold.’
Although the new legislation has retained the provisions allowing for exemptions to conduct customer due diligence (CDD) on certain low-risk transactions by those engaged in the business of pre-paid cards and businesses offering e-money products, the threshold amount for exemption has now been reduced to €150 (previously €250). This means that the said businesses need to conduct more CDD measures to those transactions that were previously within the low-risk threshold. The UK, however, is allowed to exempt certain e-money products from CDD measures provided that the conditions set forth in the legislation are satisfied.
More transparency, more surveillance
Other notable provisions of the new legislation include the long-awaited establishment of the centralised bank account registries which will allow for the identification of every person holding payment accounts, bank accounts and safety deposit boxes with credit institutions. The information contained in such registries is now accessible and available to the competent authorities of the member states of the EU. Moreover, due to the clamour for reform and more transparency in the conduct of business by companies and other legal entities, the legislation has made the register containing the information regarding the ultimate beneficial owners (UBOs) of companies available to the general public without the need for them to demonstrate a ‘legitimate interest’.
