Banks and several other types of business, including gambling firms and art and antiquities dealers, are coming to terms with the EU’s 5th Anti-Money Laundering Directive (5AMLD).
Trade finance providers in particular are closely watching how new regulations on bank account registration are likely to be implemented and what their role and reporting responsibilities will be under these new rules.
Connected national registers
While all 28 EU members were expected to pass 5AMLD into law by 10 January 2020, member states have until 10 September of this year to establish central registers or data retrieval systems.
Meanwhile it is up to the European Commission to decide how these national databases should be connected so that a transparent flow of data is visible across EU member states.
Lack of clarity
It is currently unclear how much of the burden of providing the data required by these national databases will fall on financial institutions.
Also unclear is which financial institution in trade finance transactions where several banks may be involved in a transaction will be responsible for reporting bank account details.
Due diligence requirements
Other aspects of the new directive where the details of implementation are still emerging include how tougher due diligence requirements can be met.
Whereas previously banks were obliged to collect due diligence from a reliable source, 5AMLD appears to provide banks with more opportunities for information sharing, possibly through a central repository.
The directive says banks may identify the customer and verify the customer’s identity using “documents, data or information obtained from a reliable and independent source, including, where available, electronic identification means, relevant trust services…or any other secure, remote or electronic identification process regulated, recognised, approved or accepted by the relevant national authorities.”
Categories: Trade Based Financial crimes News