The EU 5th Anti-Money Laundering Directive (5AMLD) came into place in January 2020. By December 2020 the next iteration is to be implemented, the 6th Anti-Money Laundering Directive (6AMLD) introduces even more changes, and regulations that businesses have to comply with.
Regulators and governments are regularly looking for ways to protect customers, whilst tackling fraud, money laundering and cybercrimes that, unfortunately, are just some of the risks customers could face when using online services.
There are more and more regulations being put into place across the financial sector in order to prevent money laundering and fraud. With another update to the Anti-Money Laundering Directive coming into place this year, it’s time for businesses to understand how to protect their customers.
Businesses are to be compliant with the 6AMLD by 3rd December 2020 in the EU – those outside of the EU have until 3rd June 2021 to put their processes in place. Make sure you’re ready on time.
Here are some key highlights from this new Directive:
Protect Your Customers
Part of being a customer is trusting a business. If you can’t provide your customers with security and trust, a business is likely to lose those customers who become victims of money laundering. Ensure your verification processes are up-to-date, secure and trustworthy.
Tackling terrorism seems to be a core factor of the 6AMLD, even stricter than first mentioned in the 5AMLD.
Keeping up-to-date with regulations and compliance within a business presents its own challenges, but with the 6AMLD in place businesses will be able to prevent crimes linked to money laundering, such as terrorist financing, cybercrime, human trafficking, bribery, and more. (Read the list of twenty-two money laundering offences here). Alongside this comes the ability for businesses to protect their customers who could be seen as innocent victims of money laundering.
This is the first time that ‘cybercrime’ is mentioned in any AML Directive and it aims to broaden the scope to root out money laundering crimes more efficiently, through the inclusion of online activities.
The fact that cybercrime is at the forefront of the 6AMLD enables businesses to pinpoint and tackle any potential money laundering activity efficiently and effectively.
Cybercrime can affect your business and customers in a multitude of ways. Whether it’s creating fraudulent accounts or money laundering, ensure that your business is protected against cybercrime with secure and simplified identity verification methods.
In the current version of the Directive (5AMLD), individuals can be punished and held accountable for money laundering. However, in the 6AMLD the guidelines have changed, and for the first time ever, companies or ‘legal persons’ can be held accountable for the crimes. This means that if an individual within your business of significance – classed as a ‘legal person’ – has failed to prevent criminal activity from happening, then your business can be punished for the act.
Punishments for these acts can range from temporary bans to permanent closure.
Tougher prison punishments are being put in place than in the 5AMLD too. Currently, the minimum prison sentence for money laundering is one year imprisonment. This minimum sentence is being increased to four years.
Businesses will be required to cooperate with each other in the prosecution of money laundering related crimes under the new 6AMLD.
This means that if a crime takes place between two businesses, they will now be required to work together to identify the offender and prosecute them in one single way.
One key aspect mentioned in the new regulations which is vital for financial businesses, especially those dealing with Cryptocurrency, is that ‘the use of virtual currencies presents new risks and challenges from the perspective of combating money laundering.’ (See Section (6) of the new 6AMLD) We discussed this in detail in our last blog on the 5AMLD and how to overcome these issues in order to comply with the regulations.
With the new regulations in place, businesses should be looking to implement robust and automated methods of KYC and AML verification that they can trust to carry out a higher volume of identity verification checks than previously required. This is where Hello Soda can help. Our one-stop shop, Sodium, enables organisations to verify customers in real-time with the in-depth information necessary to pass this new regulation.
How we can help
Compliance cannot be achieved without the use of simple, global, automated processes. Skipping key steps in your verification processes could cause businesses to waste a lot of time and money; save your time and your money, get in touch today to discover how Hello Soda can help you to comply.
We’ve got the answers – Hello Soda’s global, automated ID verification solution, Sodium, enables businesses to verify their customers in sub-5 seconds allowing you to uplift customer acquisition. With the different elements of Sodium, that can be used alone or combined, there’s a solution for everyone.
Ensure your customer journey is up-to-date and simplified for your customers whilst complying with the latest regulations. You can read our blog about how we can help here.
Learn more about how we can help your organisation to perform instant and automated KYC checks. Book a demo today and see for yourself how powerful our suite of solutions are.