Implementation of 3^rd AML Directive

Implementation of 3^rd AML Directive: There are significant differences in the way the 3^rd Anti-Money Laundering Directive has been implemented within the Eurozone and the EU as a whole.

Differences relating to CDD (including BOs) include:

Calculation of the 25% threshold for corporates;
Categories of persons considered to otherwise exercise control over corporate entities;
Calculation of the 25% threshold for legal entities;
Control and ownership structure;
Verification of identity;
High-risk indicators and enhanced due diligence;
Requirement to keep BO information up-to-date; and
Use of BO information obtained for CDD purposes.

Beneficial Owner

In the case of corporate entities the definition is clarified, and further guidance on how to identify beneficial ownership is outlined in the text.
In case of trusts and similar arrangements the settlor, trustee, protector, beneficiaries or class of beneficiaries (or similar positions) or any other person exercising control shall be regarded as a beneficial owner.

Politically Exposed Persons (PEPs)

Members of governing bodies of political parties will also be regarded as PEPs.
EDD will not be limited to PEPs residing in other Member States or foreign jurisdictions, but will also be applicable to domestic PEPs.

Customer Due Diligence

Simplified Due Diligence
- No longer considered to mean “no CDD”.
- Entirely risk-based.
- Enhanced Due Diligence
- Still mandatory in specific circumstances.
- Inclusion of further specific circumstances where the application of EDD is mandatory (for example, domestic PEPs and certain complex transactions).
Reliance on third parties
- No longer strictly rules-based.
- Introduction of group-wide reliance.