Anti-Money Laundering (AML)

Current EU AML rules apply to insurance intermediaries where they act with respect to life insurance and other investment-related services and investment firms.

In July 2021, the European Commission presented a package of four legislative proposals to strengthen EU rules on anti-money laundering and countering the financing of terrorism (AML/CFT). The package aims to make the EU AML/CFT framework more effective and adapt it to technological developments such as the use and transfers of crypto-currencies.

The Commission’s legislative package does not change the scope of the existing AML/CFT rules. According to Article 2(6)(C) of the proposed “Single Rulebook” Regulation, AML/CFT rules apply to:

(c) an insurance intermediary as defined in Article 2(1), point (3) of the IDD where it acts with respect to life insurance and other investment-related services

(d) an investment firm as defined in Article 4(1), point (1) of MiFID II

In parallel, the European Banking Authority (EBA) has been developing and revising Guidelines related to the application of AML/CFT rules through the EU.

Commission’s AML package

The Commission’s legislative package contains four proposals:

  1. A Regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the “Single Rulebook” Regulation) - containing directly applicable rules regarding, amongst others, Customer Due Diligence (CDD) measures and Beneficial Ownership
  2. A 6th AML/CFT Directive replacing the 4th AML/CFT Directive 2015/849/EU (itself amended by the 5th AML/CFT Directive) - containing dispositions to be transposed into national legislations regarding, amongst others, national supervisors, Financial Intelligence Units (FIUs) and registers of Beneficial Ownership
  3. A Regulation establishing the European Anti-Money Laundering Authority (AMLA) – providing this future Authority with supervisory, monitoring and coordination powers
  4. A revision of the 2015 Regulation on Transfers of Funds - aiming to identify those who send and receive crypto-assets for anti-money laundering and countering terrorism financing purposes, identify and report possible suspicious transactions and if necessary block them

On 17 April 2023, the EP Plenary confirmed the adoption of the ECON and LIBE Committees’ draft reports on the “Single Rulebook” Regulation, the 6th AML/CFT Directive and the AMLA Regulation. The Council of the EU presented two positions: one on the “Single Rulebook” Regulation and the 6th AML/CFT Directive and a partial one on the AMLA Regulation. When it adopted the ECON/LIBE draft reports, the EP Plenary agreed to open the trilogue negotiation which began in May 2023.

Regarding the revision of the Regulation on Transfers of Funds, the proposal has already been subjected to trilogue negotiations and a provisional agreement was reached on 5 October 2022. It was formally adopted by the EP Plenary on 20 April and by the Council on 16 May 2023.

EBA's Guidelines

In June 2022, EBA published its final Guidelines on policies and procedures in relation to compliance management and the role and responsibilities of the AML/CFT compliance officer. These Guidelines started applying on 1 December 2022.

On 21 March 2023, EBA published two sets of Guidelines addressing unwarranted de-risking and the need to ensure customer’s access to essential financial services. These sets of Guidelines aim to ensure customers, especially vulnerable ones, are not denied access to necessary financial services on the ground of AML/CFT rules. The first set of Guidelines focuses on the way financial institutions should identify ML/TF risks associated with customers who are Non-for-Profit Organisations. The second set is broader and deals with the effective management of ML/TF risks by financial institutions. 

On 29 March 2023, EBA launched a public consultation on draft amendments to its Guidelines on risk-based AML/CFT supervision. The aim of the amendments is to include crypto-asset service providers (CASPs) within the scope of the Guidelines. EBA is accepting comments on the draft until 29 June 2023. BIPAR will participate in the consultation.

BIPAR's key messages

All throughout the process of adopting new AML/CFT rules, BIPAR’s key messages were the following:

  • the risk-based approach in the identification of beneficial owners in the case of life insurance or other investment-related insurance business;
  • the obligation to appoint an AML compliance manager and an AML compliance officer;
  • the possibility to outsource the compliance function;
  • the introduction of credit intermediaries in the scope;
  • the exclusion from the scope of occupational funds and pure life insurance products.

The EP’s draft reports on the three AML/CFT texts took into account some of BIPAR’s comments. The Reports addressed some of the issues related to the position of compliance officer, by allowing entities to appoint a compliance officer who may cumulate that function with its other functions. They also introduced a degree of proportionality by identifying a series of products and services presenting a low AML/CFT risk factor and which can therefore be subjected to simplified CDD measures. These products include life insurance policies with low premiums as well as some pension and occupational pension schemes. The EP also included a provision on the development of “minimum standards” applicable to sole traders, single operators and microenterprises (which would notably address the execution of compliance functions).  

The Council’s positions also addressed the proportionality issue by introducing simplified CDD measures applicable to certain entities depending on their size and nature. The Council positions would also, in some cases, allow entities, to identify classes of beneficiaries instead of individual beneficial owners (inter alia for occupational pension funds).

Next steps

Regarding the Commission’s legislative package, the revised Regulation on Transfers of Funds now needs to be jointly signed by the European Parliament and Council before publication in the Official Journal of the EU. It will start applying 20 days after its publication.

The remaining three proposals will now have to go through trilogue negotiations before they can be finally adopted. These negotiations will settle, among other issues, the question of the location of the seat of AMLA. BIPAR will continue to follow the procedures regarding these proposals.

Regarding EBA’s revised Guidelines on risk-based supervision, EBA is accepting comments until 29 June 2023. BIPAR will respond to this consultation.