European financial companies are facing increasing legislation in the field of KYC and AML. The latest directive, AMLD6, even makes directors of financial companies criminally liable. We believe that not only more legislation, but also more cooperation in the ecosystem is needed to prevent money laundering.
Criminal prosecution under AMLD6
AMLD6 has a number of important changes. For example, the legislation provides a list of 22 new predicate offences for money laundering, including tax offences, environmental offences and cybercrime. The sanctions under the AMLD6 have also been broadened. For example, complicity is explicitly criminalised, the maximum prison sentences have increased and criminal liability applies to both natural persons holding managerial positions and legal persons.
In other words, directors of financial companies are liable and can be prosecuted as such. European Member States, in which this new anti-money laundering legislation is in force, make the violation of the AMLD6 punishable by a maximum term of at least four years of imprisonment. Additional sanctions and measures, such as a temporary ban on engaging in commercial activities, also apply.
Continuous monitoring needed
In order to ensure that financial undertakings comply with this legislation, one of the requirements is that they continuously screen their clients. However, there are still financial companies and institutions that only check a file once a year, which creates gaps in these files.
In an ideal world, we would not only after eleven months know whether one of our clients is potentially laundering money. Currently, financial firms run the risk of offering financial products and services to criminals who launder money or use it to finance terrorism. This can be done differently and better. A continuous application of CDD processes would provide real-time insights and make it easier to comply with AMLD6.
Not only the continuous monitoring of clients, but the exchange of ego-systems for ecosystem thinking is also necessary. This requires that parties with seemingly opposing interests cooperate (even more). How? By sharing data and making it available (anonymously) for KYC purposes. In this way, it becomes possible to achieve common goals and to focus on continuous KYC processes.
This is the only way to avoid fines and – in the worst case – the withdrawal of a financial company’s licence or even criminal prosecution of its directors. Let’s work together to ensure that malicious parties do not have access to financial channels, that no money is laundered and that the trust in the financial system remains intact. By focusing on continuous monitoring and putting the entire ecosystem into action.