Anti-money laundering Regulation (AML) (AML)
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Summary
Regulation (EU) 2024/1624 establishes a directly applicable EU single rulebook on preventing the use of the financial system for money laundering and terrorist financing. It lays down harmonised customer due diligence, beneficial ownership transparency, record-keeping and reporting obligations, and sets EU-wide rules on internal controls and risk management. It also introduces an EU-wide limit on large cash payments and strengthens requirements for high-risk situations and targeted financial sanctions compliance.
Who is affected?
Obligations apply to “obliged entities”, notably credit and financial institutions and a wide range of non-financial professionals and businesses (e.g., auditors, accountants, tax advisers, notaries and other independent legal professionals when carrying out covered activities, real estate sector actors, gambling services, and certain traders in goods). Customers and beneficial owners are indirectly affected through identification/verification requirements and restrictions on large cash payments.
Scope
Applies across the EU to obliged entities’ AML/CFT duties, including customer due diligence, beneficial ownership, reporting, internal controls, and specific EU-wide restrictions such as limits on large cash payments.
Key Points
- Harmonised customer due diligence (CDD) rules, including identification and verification of customers and beneficial owners, ongoing monitoring, and enhanced due diligence for higher-risk cases.
- Rules on beneficial ownership transparency and access to beneficial ownership information, including requirements on the quality and availability of data.
- Obligations on internal policies, controls and procedures, risk assessments, governance and staff training for obliged entities.
- Requirements to detect and report suspicious transactions/activities and to keep records for supervisory and FIU purposes.
- EU-wide limit on large cash payments (with limited exceptions), alongside strengthened measures for high-risk third countries and other higher-risk situations.
- Clarified and strengthened rules on the application of targeted financial sanctions and screening measures in the AML/CFT framework.
Frequently Asked Questions
Who must comply with Regulation (EU) 2024/1624 (AML)?
Obliged entities, including credit and financial institutions as well as a broad range of non-financial professionals and businesses (such as auditors, accountants, tax advisers, notaries, real estate professionals, gambling service providers, and certain traders in goods), must comply with the AML Regulation.
What activities and obligations fall under the scope of the AML Regulation?
The Regulation covers customer due diligence, beneficial ownership transparency, reporting of suspicious activities, record-keeping, internal controls, risk management, and compliance with targeted financial sanctions. It also imposes an EU-wide limit on large cash payments.
What are the key customer due diligence (CDD) requirements?
Obliged entities must identify and verify the identity of customers and beneficial owners, conduct ongoing monitoring of business relationships, and apply enhanced due diligence in higher-risk situations.
What are the penalties for non-compliance with the AML Regulation?
Non-compliance can result in administrative sanctions, including significant fines, restrictions on business activities, and reputational damage. The specific penalties are determined by national authorities in accordance with the Regulation's requirements.
How does the AML Regulation address beneficial ownership transparency?
The Regulation requires obliged entities to collect, verify, and maintain accurate information on beneficial owners and ensure this information is accessible to competent authorities and, under certain conditions, the public.
What is the EU-wide limit on large cash payments introduced by the AML Regulation?
The Regulation sets a maximum threshold for cash payments across the EU, above which such payments are generally prohibited, with limited exceptions. This measure aims to reduce the risk of money laundering through anonymous cash transactions.
How does the AML Regulation interact with other EU AML/CFT laws?
The Regulation forms part of the EU's single rulebook on AML/CFT and works alongside the AML Directive and the establishment of the EU Anti-Money Laundering Authority (AMLA), ensuring harmonised rules and supervisory practices across Member States.
What practical steps should obliged entities take to comply with the AML Regulation?
Entities should update their internal policies and procedures, conduct regular risk assessments, train staff on AML/CFT obligations, implement robust CDD and reporting systems, and ensure compliance with the cash payment limit and beneficial ownership requirements.
When does Regulation (EU) 2024/1624 apply and is it directly applicable?
The Regulation is in force and directly applicable in all EU Member States, meaning its provisions do not require national transposition and must be followed as written.
What are the record-keeping requirements under the AML Regulation?
Obliged entities must retain documents and information obtained through CDD and transaction monitoring for a specified period, making them available to competent authorities and Financial Intelligence Units (FIUs) upon request.
Key Terms
- Obliged Entity
- A person or organisation subject to AML/CFT obligations under the Regulation, including financial institutions and specified non-financial businesses and professions.
- Customer Due Diligence (CDD)
- A set of procedures for identifying and verifying the identity of customers and beneficial owners, assessing risks, and monitoring business relationships.
- Beneficial Ownership
- The natural person(s) who ultimately owns or controls a customer or the person on whose behalf a transaction is conducted.
- Enhanced Due Diligence (EDD)
- Additional checks and measures required for higher-risk customers, transactions, or situations, such as those involving high-risk third countries.
- Financial Intelligence Unit (FIU)
- A national authority responsible for receiving, analysing, and disseminating reports of suspicious financial activity related to money laundering or terrorist financing.
- Targeted Financial Sanctions
- Restrictive measures, such as asset freezes or prohibitions on making funds available, imposed on designated individuals, entities, or countries for AML/CFT purposes.
- Internal Controls
- Policies, procedures, and systems implemented by obliged entities to manage and mitigate money laundering and terrorist financing risks.
- Risk Assessment
- The process by which obliged entities identify, evaluate, and document the risks of money laundering and terrorist financing associated with their activities and customers.
- Record-Keeping
- The obligation to retain documents and information related to customer identification, transactions, and CDD for a specified period for inspection by authorities.
- Large Cash Payment Limit
- An EU-wide maximum threshold for cash transactions, above which cash payments are generally prohibited to reduce money laundering risks.