The Sixth Anti-Money Laundering Directive is the EU’s latest iteration of a deliberate attempt to define crime related to terrorism and money laundering in the EU Member States, as well as to determine the liability and penalties of the parties involved in the aforementioned activities.
The 6AMLD came after just 6 months after the adoption of the 5th EU Anti-Money Laundering Directive (5AMLD), highlighting the speed at which things are evolving in the KYC industry. Financial crime coupled with the rise of cybercrime has threatened companies, governments and countries in recent years and these Directives showcase a concentrated effort to combat that.
What changes does the 6AMLD propose?
If you had to put a general title on the proposals of the latest Directive, you could safely say that it expands and digs deep into Predicate Offenses. You’re probably in the process of Googling the term ‘predicate offense’ so let us save you the trouble.
In simple words, a predicate offense is a crime that is part of or leads to a larger crime. More often than not, financial crimes consist of chained actions and reactions that eventually culminate in what we know as money laundering.
What the 6AMLD was put together to do, is reverse engineer money laundering and break down the crime into smaller crimes, identify them, point them out and hold everyone involved in them accountable. The Directive defines and standardizes the following 22 predicate offenses for money laundering in all EU member states:
Impact on FIs: How Should They Prepare?
Even though the changes proposed by the AMLD6 are very particular, the learnings and takeaways for FIs are broad. If there’s anything to learn from the AMLD6 is that it won’t be the last time we will hear from the European Commission. The frequency and intensity of regulation will only escalate and FIs can’t afford to simply react to each and every new piece of regulation.
It is evident that the entire KYC and AML industry is under siege and FIs need to take a holistic approach in their planning if they want to stay afloat. The days of doing the absolute minimum for compliance are long gone, with RegTech taking a prominent role in this equation.
RegTech should be seen as a revenue generator and key strategic differentiator, establishing compliance as one of the most important departments in the company. FIs should build around Regulatory Technology and aim to create a governance framework that emanates from the top, down.
Buying the appropriate technology and establishing internal processes are the tools to achieving the goal but the cornerstone of success lays in understanding the importance and gravity of compliance as a function.
