Author: Nicola Sharp
18 December 2020
2 min read
Nicola Sharp of Rahman Ravelli highlights some questions that need answers regarding the Sixth Anti-Money Laundering Directive
The deadline for European Union member states to transpose the Sixth Anti-Money Laundering Directive (6AMLD) was December 3, 2020. Yet there are still questions about aspects of its enforcement that are unanswered.
The effect 6AMLD will have remains to be seen, and it is still unclear as to how it will be implemented and enforced by each member state.
There is also uncertainty about whether the new directive goes far enough to ensure banks and other financial institutions are being required to perform sufficiently robust checks on their clients. This is particularly relevant in light of both new technologies that have been developed and the impact of the coronavirus pandemic.
6AMLD seeks to harmonise how EU member states combat money laundering across the bloc, and it is a positive step in the right direction. Importantly, the directive does this by providing cohesive definitions of money laundering offences; including a list of predicate offences and the further money laundering offences of aiding and abetting, inciting and attempting. The Directive also contains provisions for tougher punishments and seeks to improve co-operation between member states to assist prosecutions. It may prove to be an effective deterrent.
Significantly, 6AMLD extends liability to “legal persons”, which means that firms may be criminally liable for the actions of employees who engage in criminal activity. Yet the reality of company liability in respect of individual directors and money laundering reporting officers (MLROs) is not certain and will require clarification.
The degree of knowledge required for the Directive to kick in is very vague – but also potentially problematic. 6AMLD fails to make it clear what the criteria are under which directors, trustees or MLROs might be open to criminal prosecution under an ambiguous transposition of the Directive by member states. Exactly what “knowingly” means in a corporate context not being clear could pose headaches for bigger institutions.
The extension of criminal liability to “legal persons” under Article 7 of 6AMLD inevitably shifts the onus onto the adequacy of compliance systems in place at firms that fall under the legislation. Under Article 7, EU members must ensure that legal persons can be held liable for the conversion, transfer, concealment or acquisition of property knowingly derived from, or through, criminal activity. This should be of particular consideration because instances of money laundering are likely to happen despite the rigour of any controls in place at financial institutions and other such firms. Appropriate safeguarding should, therefore, be in place for key compliance persons (MLROs) to be able to operate in their role effectively.
Nicola is known for her fraud, civil recovery and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.