Sixth Anti-Money Laundering Directive (6AMLD)

Money laundering is a significant criminal offence that compromises the stability of financial institutions. The 6AMLD, which lists 22 predicate offences that may be connected to money laundering, was enacted by the European Union to address this issue. According to the Eurojust report, money laundering and other crimes have seen an unprecedented surge since 2016, presenting a 12-14 % increase in registered cases. Considering the demanding need of the realm, understand what 6AMLD is, as well as its essential features, history, and compliance requirements.

A Brief History of 6AMLD

The sixth money laundering directive (6AMLD), which comes after five earlier ones, strengthens the cornerstones of the European Union’s framework for combating the funding of terrorism and money laundering. Growing international concerns about drug money flowing through the legal banking system led to the implementation of the first AMLD in 1991. Other directives, such as 2AMLD in 2001, third-directive in 2005, 4AMLD in 2015, and 5AMLD in 2018, have improved and broadened the framework since then. They now include updated requirements and targets that each member state must meet through their own laws.

What is the 6AMLD?

The European Union’s 2018/1673 Directive is known as the Sixth AML Directive or 6AMLD. In addition to building on the foundation set in 5AMLD, this standard suggests a significant advancement in several legal domains.

AML5 creates the standard framework for electronic KYC (Know Your Customer) procedures in Europe and permits financial institutions to offer services in a digital single market with 508 million customers. It is strictly enforced as of January 10, 2020. There were no longer any obstacles to conducting business in a variety of highly fragmented marketplaces and industries.

Rather than being a comprehensive body, the present criminal framework against money laundering within the EU is better understood as a patchwork of laws and regulations. Due to this structure, certain instances lack legal clarity, and some crimes and security breaches by businesses go unrecognized.

To remedy these issues, the 6th AMLD incorporates evolving corporate accountability and stricter definitions of offenses and punishments to ensure that cases are not left unanswered.

A wider definition of money laundering, harsher punishments for offenders, central registers required for beneficial ownership, enhanced collaboration amongst authorities, and the identification of 22 predicate offenses that can be linked to money laundering are some of the salient characteristics of 6AMLD. The rule covers a broad spectrum of organizations, including auditors, tax advisors, financial institutions, and providers of virtual asset services.

Key Highlights of 6AMLD

Although AML5 was already considering these punishments for businesses and potential offenders, the EU’s sixth AML Directive strengthens and controls them. Thus, as major modifications to the 6AMLD, the 6th EU Anti-Money Laundering Directive introduces the following sections:

Technology and Resources Needed to Comply with 6AMLD

All businesses and organizations that have their operations governed and impacted by this standard are required to create technological protocols to meet EU 6AMLD criteria and identify risk factors to prevent crimes. To comply with the Directive, processes (like KYC and KYB) must have the requisite technological capacity.

Aiding, Motivating, Attempting, and Carrying Out

These behaviors comprise hostility and are punishable as crimes include aiding, inciting, and predisposing someone to conduct crimes.

Combined Predicate Crimes

The EU’s Sixth Directive on Anti-Money Laundering (AML) has defined 22 distinct offenses, ranging from tax offenses to digital crimes. To identify them, safe KYC procedures must be established.

Criminal Liability for Legal Persons

Crimes may be connected to a natural person (individuals) or a legal body (entity, company). Employees and company executives are held accountable for this.

Increased Penalties for Crimes 

Money laundering-related offenses carry a mandatory minimum sentence of four years in jail or a 10,000 euro fine. Similarly, the maximum amount of sanctions (and their equivalents in other currencies) is 5 million euros. Authorities are also encouraged to apply model penalties by the 6AMLD directive.

Extended Cooperation Amongst EU Member States

The 6AMLD outlines how nations should cooperate to detect financial crimes and cross-border aggression. International monitoring is also put in place for businesses that disobey the directive.

Read our whitepaper: 6AMLD Practices: Mapping Risk Factors and Opportunities 

How to Comply with 6AMLD?

The modified regulatory scope that 6AMLD has brought about, including the additional predicate offenses that need to be watched out for and the altered risk environment in which they will be operating, should be understood by obligated enterprises. Businesses must manage their AML resources, train compliance personnel, and assess how they have deployed technology to ensure they can satisfy the requirements for transaction monitoring and screening currently in place.

The EU’s New AML/CFT Framework

The European Commission released a set of recommendations for a comprehensive revision of the AML/CFT framework since 6AMLD went into effect in 2020. Compliance professionals refer to them as the “new” 6AMLD because the term 6AMLD is frequently used to refer to the current rule implemented in 2020. Financial institutions and other businesses subject to AML/CFT regulations must stay informed about any updates about the reform plan.