The Fifth Anti-Money Laundering Directive (“MLD5“) entered into force in July 2018. MLD5 updates the legal framework under the Fourth Anti-Money Laundering Directive (“MLD4“) and must be implemented by the EU member states by January 2020. In response to the growing concerns over terrorist financing and the revelations of the Panama Papers, the amendments in MLD5:

• increase transparency with respect to the beneficial ownership registers, which EU member states are required to establish under MLD4;
• clarify and harmonize the enhanced due diligence measures that need to be applied to business relationships or transactions involving “high risk third countries”;
• require EU member states to create and maintain a list of public functions that qualify as “politically exposed persons” or “PEPs” in their jurisdiction;
• restrict the anonymous use of prepaid cards in order to mitigate the risk that they may be used for terrorist financing;
• grant new powers for financial intelligence units, including the power to request, obtain and use information from any obliged entity based on their own analysis and intelligence, rather than just when triggered by a prior suspicious activity report; and
• require member states to establish centralised registers or data retrieval systems to enable financial intelligence units and national competent authorities to access information about the identities of holders of bank and payment accounts and safe-deposit boxes.

In addition to these broad objectives, MLD5—for the first time—brings certain virtual currency service providers within the scope of EU anti-money laundering and terrorist financing regulations. Click here to read the full Orrick-authored alert.