In the coming years, the current Dutch Anti-Money Laundering and Counter-Terrorist Financing Act (Wwft) will bereplaced by new European anti-money laundering rules. This so-called AML framework comprises several pieces of regulation, including the AML Regulation (AMLR), the 6th Anti-Money Laundering Directive (AMLD6) and the AML Authority Regulation (AMLAR).
In this thematic article, we focus on changes in definitions and scope of application compared to the current Dutch AM regime. We discuss:
how the definitions of client, PEP and UBO under the AMLR deviate from Dutch practice,
the shift in transaction thresholds for customer due diligence,
and the practical implications of these changes.
A stretch in definitions and thresholds regarding PEP, UBO and incidental transactions
The rule of thumb for determining a UBO will change. Whereas under the Wwft, a UBO is often determined by directlyor indirectly holding more than 25% (of shares, voting rights or ownership interest), the AMLR sets the threshold at25% or more. The principle that the 25% rule is an indication rather than an absolute remains unchanged: individualswith a smaller interest can still be regarded as UBOs if they exert ultimate control in another way.
The AMLR expands the group of individuals considered to be associated with a PEP. In addition to spouses, parents and children, siblings will now also fall within this definition. Due to the increased risk of corruption and money laundering, PEPs are generally subject to enhanced customer due diligence measures.
The AMLR standards generally require mandatory customer due diligence for:
any occasionaltransaction of €10,000 or more,
or two or more interrelated transactions with a combined value of at least €10,000. This differs from the Wwft, which applies a threshold of €15,000.
It is important to note that different thresholds may apply to specific types of institutions. Like the Wwft, the AMLR emphasises the importance of a risk-based approach. This means customer due diligence may also be required below these thresholds if the risk assessment indicates that a transaction gives rise to additional scrutiny.
The definition of a customer or business relationship does not change substantially. However, the AMLR explicitly states that a business relationship can be established without a written contract, for example where repetition or a continuing nature is expected.
What do the new definitions and thresholds scope mean in practice?
These changes require action. Institutions will need to update their policies, procedures and (work) processes. Examples include:
recalibrating UBO and PEP definitions;
adjust screening procedures and declaration forms for PEPs and/or UBO;
amending monitoring rules for occasional transactions
Access to and use of the UBO register can be a supportive in this process.
A risk-based approach remains essential. Identifying and assessing the specific risks of money laundering and terrorist financing relevant to your organisation is still a key element. By working proactively and in a data-driven manner, institutions can translate the new requirements into timely and effective measures.
Status and timelines of the AML framework
As of 10 July 2024, the AMLR and AMLD6 have entered into force. Both the AMLR and AMLD6 will be largely applicable from 1 July 2027. Additionally, the Regulation establishing the European AML/CFT Authority (AMLAR) has entered into force as of 25 June 2024 and will be largely applicable from 1 July 2025.
The AMLA (EU Authority for Anti-Money Laundering and Countering the Financing of Terrorism) will also have a more active role. One of AMLA’s tasks will be to develop guidelines and technical regulatory standards that will provide more clarity on the application and implementation of AMLR and AMLD6.
In the coming period, we will continue to closely monitor developments and keep you informed via our website and monthly newsletter. You can subscribe to our newsletter here:
