6AMLD (6th Anti Money Laundering Directive)

What Is 6AMLD?

6AMLD is the abbreviation used to refer to the 6th Anti-Money Laundering Directive, currently in force for all companies with financial activity in the EU as a set of measures to stop money laundering. It was issued by the EU on October 23, 2018, with an implementation deadline of June 3, 2021. 6AMLD strengthens and broadens the definitions and rules of the 5th Anti-Money Laundering Directive (5AMLD), which came into effect in January 2020.

The impact of 6AMLD is considerable. The directive covers a digital single market of 508 million consumers – individuals already benefitting from the Know Your Customer (KYC) and anti-money laundering (AML) processes laid out in the 5th Anti-Money Laundering Directive. There are 22 predicate offenses listed in total, in an effort to provide strong and clear deterrents for money launderers.

It is hard to assess the true scale of the impact of money laundering on the world. The estimate from the United Nations Office on Drugs and Crime is that between 2% and 5% of global GDP is laundered each year. That equates to somewhere between $715 billion and $1.87 trillion annually. Meanwhile, the European Union Agency for Criminal Justice Cooperation (Eurojust) reports that crossborder money laundering cases have doubled over the past six years within the EU, rising from 315 in 2016 to 649 in 2021.

To check whether you need to do more to protect your business against money launderers, you can use this AML checklist.

How Does 6AMLD Work?

The 6th Anti-Money Laundering Directive lays out minimum rules for all EU member states in relation to money laundering and to the definition of criminal offenses and sanctions in relation to it. Businesses in those territories must comply with 6AMLD’s requirements in relation to detecting and preventing AML fraud.

6AMLD includes a number of new definitions and an expanded regulatory scope. It also paves the way for increased cooperation between member states while extending criminal liability to organizations and supporting tougher punishments. The intent is for it to work as a strong deterrent.

Companies ought to comply with 6AMLD in order to remain compliant – or risk fines, loss of reputation as well as potential imprisonment for those persons found accountable. In fact, 6AMLD increased the minimum time in prison for AML offenses from the 5AMLD’s one year to five.

Below, you can try SEON’s AML screening check, which goes through sanctions lists, PEP lists, crime watchlists and more to ensure compliance with 6AMLD and similar legislation from across the world.

What Does 6AMLD Say about Crypto?

Crypto-related considerations were first introduced into EU AML law with 5AMLD, which came into effect on January 10, 2018 and focused a lot on the online world and cyber offenses. Because 6AMLD criminalizes aiding, abetting and inciting money laundering in addition to the act of money laundering itself, cryptocurrency brokers, wallets and adjacent platforms can end up on the receiving end of fines and even lose their license just as easily as those handling fiat currencies.

Stakeholders in the cryptocurrency and Web 3.0 sector at large have been following developments closely as money laundering in crypto legislation is slowly but surely introduced as well as strengthened across much of the world. With 6AMLD in particular, a business that functions as a crypto exchange platform, for example, can be severely fined for enabling money laundering on its platform, even if it can prove nobody at the company was aware of this.

In fact, the EU further signalled that it will be focusing more on the crypto industry when it comes to AML considerations in a March 2022 press release:

“Crypto-assets’ transfers would need to be traced and identified to prevent their use in money laundering, terrorist financing, and other crimes.”

Does 6AMLD Apply to the UK?

Strictly speaking, no. In 2018, the UK Government announced that following the country’s exit from the European Union, it will not be adopting 6AMLD legislation. However, British businesses with financial activity in the EU or customers in the EU still need to comply.

What’s more, experts have pointed out that the UK has in place legislation that effectively covers these points and thus is effectively on the same page as its EU peers. In fact, the UK government has also said the country’s anti-money laundering laws are “largely compliant” with 6AMLD.

Why Is 6AMLD Important?

6AMLD is important because it supports member states in combating both money laundering and terrorist financing, which helps local and regional government and ensures the economy is healthy. It is also important because, for the first time, it explicitly includes cybercrime and environmental crimes as predicate offenses. This reflects the EU’s commitment to proactively keeping pace with the evolution of criminal activity in the digital era.

At its highest level, 6AMLD is important because money laundering is often closely linked with the financing of terrorism and with serious and organized crime networks.

Clearly, no organization – or senior decision-maker – can afford to ignore their obligations under 6AMLD. That means putting processes in place, researching and making use of the top AML software and tools, and ensuring that all staff is sufficiently trained to understand the requirements of 6AMLD and the actions they must take as a result of its rules.

How Does 6AMLD Help Fight Fraud?

6AMLD helps fight fraud by defining what constitutes money laundering offenses and harmonizing those definitions across the European Union. It also supports greater cooperation between member states by recognizing that money laundering predicate crimes and the laundering itself can take place across international borders. In fact, it introduces requirements around sharing information between member states in respect of this.

The directive also lays the foundation for criminalizing those who aid, abet, and enable money laundering, as well as the money launderers themselves. This means that both organizations and those in them who hold decision-making responsibility can now be subject to criminal charges when money laundering takes place.

Those found guilty can face punishments including prison sentences, disqualification from carrying out commercial activities, and exclusion from accessing public funding or public benefits. They can also be subject to the closure of their establishment(s), winding up orders, freezing, confiscation, and judicial supervision.

By expanding the definition of those who bear responsibility for money laundering taking place and more clearly defining the predicate crimes, as well as facilitating easier cross-border prosecutions, 6AMLD delivers an important step towards more effective combatting of money laundering across the European Union. It also closes some of the loopholes associated with 5AMLD – another step in the right direction.

Related Terms

Related Articles

Sources