• Tallman

How 5 AMLD created the AML version of 21 Jump Street

The European Union, and its financial regulatory framework is constantly changing. Additional regulatory requirements, which have been codified in 5 AMLD, and soon in 6 AMLD, are currently hindering operations of financial institutions in the EU.

Financial Institutions which are located in the European Union (EU) such as Electronic Money Institutions (EMIs), crypto exchanges, PSD and EMD agents (regulated under the FCA), payments institutions and payment service providers (PSPs) are obliged under the new EU financial regulatory framework to hold an Anti Money Laundering (AML) training for their respective compliance teams.

By this, the compliance teams will not only need to prove their compliance knowledge and expertise, they will also need to demonstrate significant regulatory compliance in EU Sanctions, banking regulations, politically exposed persons, EU Member State regulations in which the financial institution is licensed under and additional requirements.

As such, it is necessary for financial institutions to ensure that their compliance teams pass a proper and ad-hoc training, regardless of their physical location and operations. The mere fact that the institutions target EU clients, or even clients with an EU Passport, imminently imposes the regulatory liability of 5 AMLD.

Bearing in mind that financial institutions that are located in the EU, which are also licensed and regulated under the EU Regulatory Framework, ESMA, the ECB and local Member State Financial Intelligence Units (FIUs) have issues with incurring high risk indication by the regulators, it is vital for these institutions to have their compliance in check.

5 AMLD not only changed the crypto market to an extent that has made it more difficult for financial institutions to operate, making them more prone to distribute their efforts into regulations, rather than operations. It is for this exact same reason that it is vital for financial institutions to tend to their compliance departments in order to mitigate and minimize the potential and constant risk, and also as long as the compliance departments are not fully trained and have wrinkle-free policies, operations are hindered.

Bearing in mind the turbulent financial market in the EU, the crypto exchange license crisis in Estonia, and the impact that it directly has on the EMIs and banks, a mandatory and obligatory training mandated by 5 AMLD should not be seen as an obligation, but as an opportunity for regulatory reform, ad-hoc compliance, and long term investment in operations.

Ella Rosenberg is an EU Regulatory Consultant. She consults on AML in the crypto currency industry, construction and defense/ HLS industry, Blockchain, AI, drone regulation, EU firearms regulatory framework, Art industry, financial investigations and tokenisation of maritime logistics. 

Image byOpenClipart-VectorsfromPixabay


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