The Sixth Anti-Money Laundering Directive (6AMLD) ushers in a new, tougher-on-crime era in the EU. While keeping up with regulatory compliance has its challenges, the good news is that these new laws help organisations move past the business of compliance and get to the heart of the matter: stopping the heinous crimes enabled by money laundering. Money laundering is directly linked to a rise in bribery, corruption, human trafficking, terrorist financing, and other human rights travesties. Regulations like 6AMLD can empower organisations to create more effective AML programs that help the innocent victims of money laundering crimes.
Regulated entities operating within the EU zone must be compliant with 6MLD by 3 December 2020, and entities operating outside of the EU must be compliant by 3 June 2021.
Here is an overview of five key changes in 6MLD.
1. Increased jail sentences
6MLD requires a minimum jail term of at least four years for money laundering offenses, which is up from the current one-year minimum term. Additionally, judges may also levy fines upon individuals as well as other punishments such as excluding entities from public funding. The increase in jail time, along with financial repercussions, illustrates the EU’s commitment to stricter anti-money laundering enforcement. It also encourages EU member states to enact national legislation to close any gaps in national sentencing for money laundering offenses.
2. A single definition for predicate offenses
A predicate offense is a criminal activity that enables a more serious crime. With 6MLD, there is one definition of predicate offenses across the Member States. This is important because a single definition allows for a standard categorisation of predicate offenses as a criminal act. The Sixth Anti-Money Laundering directive sites twenty-two predicate offenses, which include cybercrime and environmental crime.
A predicate offense is a criminal activity that enables a more serious crime. With 6MLD, there is one definition of predicate offenses across the Member States. This is important because a single definition allows for a standard categorisation of predicate offenses as a criminal act.
The Sixth Anti-Money Laundering directive sites twenty-two predicate offenses, which include cybercrime and environmental crime.
3. Aiding and abetting
Up to this point, anti-money laundering regulations sought to penalise those who financially benefited from money laundering activities. Going forward, anyone caught ‘aiding and abetting, inciting, and attempting’ money laundering is also legally culpable. Basically, this means that helping a money launderer in any way is also punishable as a criminal offense and subject to a minimum prison sentence of four years.
Up to this point, anti-money laundering regulations sought to penalise those who financially benefited from money laundering activities. Going forward, anyone caught ‘aiding and abetting, inciting, and attempting’ money laundering is also legally culpable.
Basically, this means that helping a money launderer in any way is also punishable as a criminal offense and subject to a minimum prison sentence of four years.
4. Legal persons
One of the significant changes in 6MLD is the extension of criminal liability to legal persons. An example of a legal person is a company or corporation. Organisations operating in the EU Member States will now be held criminally liable for failing to prevent money laundering. The punishments can range from temporarily banning organisations from doing business all the way to the permanent closure of businesses.
One of the significant changes in 6MLD is the extension of criminal liability to legal persons. An example of a legal person is a company or corporation. Organisations operating in the EU Member States will now be held criminally liable for failing to prevent money laundering.
The punishments can range from temporarily banning organisations from doing business all the way to the permanent closure of businesses.
5. Cross-border cooperation
6MLD addresses the principle of dual criminality — the fact that a crime can take place in one jurisdiction while money laundering takes place in another — by requiring local jurisdictions to share information to allow for the prosecution of offenses in two or more Member States. Member States will be required to criminalise money laundering related to six predicate offenses, whether or not these offenses are lawful in the jurisdiction they are committed. The six predicate offenses are as follows: participation in an organised criminal group and racketeering; terrorism; human trafficking and smuggling migrant smugglings; sexual exploitation; illicit trafficking in narcotics and psychotropic drugs; and corruption.
6MLD addresses the principle of dual criminality — the fact that a crime can take place in one jurisdiction while money laundering takes place in another — by requiring local jurisdictions to share information to allow for the prosecution of offenses in two or more Member States.
Member States will be required to criminalise money laundering related to six predicate offenses, whether or not these offenses are lawful in the jurisdiction they are committed. The six predicate offenses are as follows: participation in an organised criminal group and racketeering; terrorism; human trafficking and smuggling migrant smugglings; sexual exploitation; illicit trafficking in narcotics and psychotropic drugs; and corruption.
6AMLD does not include as many changes as 5AMLD did, but its focus on accountability and criminality should motivate compliance officers and banking executives to review their program policies, procedures, and AML technology and make any needed improvements. If 6AMLD does anything, it creates the urgency for implementing foolproof AML programs.
While this focus on criminality can be stressful, it’s important to view the changes brought about by 6AMLD in the context of the next step in ongoing developments. Our digital world is full of tech-savvy criminals who continuously introduce new threats and schemes, requiring governments and organisations to evolve and enhance how they fight against money laundering. Viewing 6AMLD in this continuum allows organisations to develop more flexible approaches to compliance so they can more easily comply with regulatory changes.
About Meagan Birch
Prior to joining Feedzai, Meg served as the MLRO and Head of Compliance for global financial institutions. She has led many risk and regulatory compliance programs at financial institutions such as Barclays, HSBC, and Wells Fargo.
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