CAMS certification training resource

FIFTH DIRECTIVE
Directive (EU) 2018/843 (“Fifth Anti-Money Laundering Directive”) of the European
Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the
prevention of the use of the financial system for the purposes of money laundering or
terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU.

The Fifth Anti-Money Laundering Directive was adopted and entered into force on 9 July
2018. Member states had to implement these new rules into their national legislation by 10
January 2020.

Changes brought about through the introduction of the Fifth Anti-Money Laundering
Directive are detailed below.

Extended scope of persons subject to AML obligations

The scope the Money Laundering Directives is extended to the following persons:
• Auditors, external accountants, tax advisors, and any other person that undertakes
to provide, directly or indirectly, material aid, assistance or advice on tax matters as
principal business or professional activity.
• In addition to the requirements for real estate agents that are defined in previous
directives, the 5th Directive extends to their acting as intermediaries in the letting of
immovable property, but only in relation to transactions for which the monthly rent
amounts to EUR 10,000 or more.
• Persons trading or acting as intermediaries in the trade of works of art, including
when this is carried out by art galleries and auction houses, where the value of the
transaction or a series of linked transactions amounts to EUR 10,000 or more.
• Providers of exchange services between virtual currencies and fiat currencies, and
custodian wallet providers who must also be registered with the competent
authority of the Member State.

Beneficial Ownership

• Introduction of public beneficial ownership registers, with a requirement to

implement a verification mechanism for information collected.
• National registers of beneficial ownership information are required to be
interconnected directly to facilitate cooperation and exchange of information
between member states.
• Data on beneficial owners of trusts needs to be accessible by competent authorities
and Financial Intelligence Units. This data should be accessible without restriction by
persons who can demonstrate a ‘legitimate interest’ (e.g. Banks, Lawyers etc).

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Centralised Bank Account Registers

• Member states shall put in place centralised automated mechanisms, such as

central registries or central electronic data retrieval systems, which allow the
identification, in a timely manner, of any natural or legal persons holding or
controlling payment accounts and bank accounts to national FIUs.

Politically Exposed Persons (PEPs)

• Requirement for member states to issue lists indicating the specific functions which
qualify as prominent public functions (e.g. Heads of Government departments,
elected ministers etc.).

Prepaid Cards

Given the risks associated with prepaid cards, the 5th Money Laundering Directive proposes
the following:
• Lowering the monthly transactional limit and maximum amount stored on prepaid
cards for which obliged entities may not apply customer due diligence measures to
EUR 150.
• Lowering the online transaction limit of a prepaid card to EUR 50.
• Prepaid cards issued outside of the EU are prohibited unless the jurisdiction in
which they were issued has equivalent legislation to the Fifth Money Laundering
Directive.

High-Risk Third Countries

High-Risk Third Countries are identified by the EU as jurisdictions outside the EU having
strategic deficiencies with regard to AML/ CTF controls.

Obliged entities must carry out certain Enhanced Due Diligence measures when dealing
with business relationships or transactions involving high-risk third countries. There is a
requirement to obtain:
(a) Additional information on the customer and on the beneficial owner(s).
(b) Additional information on the intended nature of the business relationship.
(c) Information on the source of funds and source of wealth of the customer and of the
beneficial owner(s).
(d) Information on the reasons for the intended or performed transactions.
(e) The approval of senior management for establishing or continuing the business
relationship; and/or
(f) conducting enhanced monitoring of the business relationship by increasing the
number and timing of controls applied and selecting patterns of transactions that
need further examination.

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High-risk transactions

In addition to the list of existing factors that constitute high risk transactions, member
states are now required to consider the following factors when assessing the risk of Money
Laundering or Terrorist Financing:
• Transactions related to oil, arms, precious metals, tobacco products, cultural
artefacts and other items of archaeological, historical, cultural and religious
importance, or of rare scientific value, as well as ivory and protected species.

Virtual currencies

• The introduction of a legal definition of virtual currencies: “a digital representation

of value that is not issued or guaranteed by a central bank or a public authority, is
not necessarily attached to a legally established currency and does not possess a
legal status of currency or money, but is accepted by natural or legal persons as a
means of exchange and which can be transferred, stored and traded electronically”;
and
• National Financial Intelligence Units (FIUs) should be able to obtain information
allowing them to associate virtual currency addresses to the identity of the owner of
virtual currency.

The amendments introduced in the Fifth Anti-Money Laundering Directive introduce

substantial improvements to better equip the Union to prevent the financial system from
being used for money laundering and terrorist financing activities by responding to
emerging risks.

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or print this document. It is copyrighted material. Do not share. No other use is allowed v1.01 04SEP2020
without express written permission from ACAMS.