It’s time to think different about your Contracting and Financial workflow...

The EU’s regime to address anti-money laundering, and to counter the financing of terrorism is reinforced this week, with the Fifth Money Laundering Directive (5AMLD) coming into force. It impacts five main areas: cryptocurrencies, prepaid cards, high value goods, beneficial ownership, high-risk countries, and politically exposed persons.

In our blogpost we highlight the new rules affecting prepaid cards and beneficial ownership, based on the review of Dhanum Nursigadoo, Financial Crime Specialist, published on fintech.finance.

Prepaid cards issued outside the EU are now prohibited unless they were issued in a territory enforcing legislation equivalent to the EU’s AML/CFT and KYC standards – photo: bettingzebra.com
Prepaid Cards

The monthly transaction limit on prepaid cards is lower than ever before, at €150 (as compared to the previously applicable limit: €250). This means that firms will be required to carry out identity checks on customers using prepaid cards funded with more than €150. Similarly, anonymous remote or online transaction limits are reduced to €50.

Prepaid cards issued outside the EU are now prohibited unless they were issued in a territory enforcing legislation equivalent to the EU’s AML/CFT and KYC standards.

Obliged entities must review the way they handle prepaid card payments and put mechanisms in place to identify (and refuse) transactions using cards from non-EU sources. This requirement may involve significant revision of existing systems and procedures.

Beneficial Ownership

5AMLD builds on the steps introduced in 2017, which introduced a focus on ultimate beneficial ownership (UBO) for the purposes of risk mitigation and money laundering prevention.

  • UBO lists (drawn up under 4AMLD) are to be made publicly accessible within 18 monthsof 5AMLD’s implementation date.
Member states are to strengthen their UBO verification mechanisms – photo: carporasoandpartnerslawofficepanama.com
  • The UBO-related rules also apply to trusts (or any similar arrangement).
  • UBO national registers must be inter-connected at an EU level in order to facilitate cooperation and the exchange of information between member-state authorities. However, in a number of countries, it’s unlikely that this requirement will be met in time for the transposition.
  • Member states are to strengthen their UBO verification mechanisms and introduce separate UBO registers for bank accounts: unlike company UBO registers, these lists will not be publicly available and only accessible by authorities.

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