The EU money laundering package creates a uniform legal framework

The EU money laundering package came into force on July 9, 2024. In particular, it includes Directive (EU) 2024/1640 (“6th Money Laundering Directive”) and Regulation (EU) 2024/1624 (“Money Laundering Regulation”). The legislative package was adopted by the European Parliament on April 24, 2024 and published in the Official Journal on June 19, 2024. The money laundering package brings us closer to the goal of creating a uniform legal framework for combating money laundering within the EU.

Both the member states and the obligated parties now have three years to prepare for the new regulations. The 6th Money Laundering Directive must be transposed into national law by the member states by July 10, 2027. On the same date, the Money Laundering Regulation will apply directly. In this respect, it will take precedence over the German Money Laundering Act (GwG).

This is what the EU money laundering package includes

• A Directive on mechanisms to be put in place by Member States to prevent the use of the financial system for the purpose of money laundering or terrorist financing (6th Money Laundering Directive)
• An Ordinance on the Prevention of the Use of the Financial System for the Purposes of Money Laundering or Terrorist Financing (Money Laundering Ordinance)
• A regulation establishing a new EU authority (AMLA)
• A Regulation recasting the Regulation on transfers of funds (Regulation (EU) 2023/1113, already in force)
• Real estate register

Money laundering regulation introduces uniform cash limit

According to the Money Laundering Ordinance, cash payments of up to 10,000 euros may only be made without reporting obligations in future. However, the member states can introduce a lower upper limit. In future, however, it should be noted that the customer must be identified from as little as EUR 3,000.

Changes to the group of obligated parties

In principle, goods traders will no longer be obligated parties in the future. Under the current AMLA, they already have the option of restricting their obligations under money laundering law if cash transactions of EUR 10,000 are excluded. With the Europe-wide cash limit now contained in the Money Laundering Regulation, goods traders are now fundamentally excluded from the group of obligated parties. It remains to be seen what this will mean in concrete terms for goods traders, particularly with regard to the extended money laundering offense under Section 261 of the German Criminal Code.

What is new is that dealers in luxury goods and cultural assets will be obliged to report certain transactions to a central reporting office. For luxury goods dealers who trade in motor vehicles, yachts or private jets, a reporting obligation applies to transactions of EUR 250,000 or more (luxury car transactions) or EUR 7,500,000 or more (watercraft and aircraft).

In addition, the reporting obligations will also be extended to professional football clubs and agents. The specifics remain to be seen, as the respective member state can exempt associations from the obligations if there is no high risk of money laundering.

Due to the ever-increasing risk of money laundering in the crypto sector, there are innovations in this context: First and foremost, providers of crypto services will in future belong to the group of obligated parties. Crypto asset service providers in particular will be subject to increased due diligence obligations. For example, they must disclose comprehensive details of money transfers, particularly in the case of cross-border correspondent banking relationships and transactions of EUR 1,000 or more. Further details are regulated by the Money Transfer Ordinance.

Standardization in determining the status of beneficial owners

The regulation clarifies that legal entities can become beneficial owners within the meaning of the transparency register both by virtue of ownership and control.

In detail, the previous threshold of 25 percent will generally remain in place for single-tier company structures. What is new is that the obligated party status is established as soon as the 25 percent threshold is reached (and not only when it is exceeded). By way of exception, a lower limit of no more than 15 percent may be set for companies from riskier sectors.

A specification is made with regard to company structures with several levels of participation. In future, the individual holdings within a chain will also have to be taken into account. The calculation of indirect ownership must then be carried out by:

• Multiplication of shares within a chain of companies and
• subsequent addition of the various chains owned by the same natural person.

Reporting obligations for foreign companies that own real estate

Foreign companies that own real estate must register in the transparency register if the real estate acquisition took place on or after January 1, 2014. The purpose of this reporting obligation is to implement data on real estate and ownership structures in the transparency register. The data is automatically transmitted to the transparency register by the land registries.

In addition, the EU money laundering package provides for the member states to set up a central real estate register at national level, which is to list all real estate owned by natural and legal persons. It must be ensured that the registers are quickly and easily accessible to the competent authorities via a single access point in each Member State.

New central supervisory authority

There will be a new authority, the AMLA (Anti-Money Laundering Authority), based in Frankfurt am Main, for the purpose of centralized European supervision. The main task of the AMLA will be to coordinate and support the respective national supervisory authorities in the fight against money laundering. The central reporting offices of the individual Member States are to be given faster and more direct access to financial, administrative and law enforcement information.

Conclusion

With the money laundering package, the EU is taking a step towards harmonizing the rules for combating money laundering and terrorism. At the same time, however, the new regulations mean a considerable implementation effort, especially for the obligated parties.

The new regulations for determining beneficial owners will pose challenges for companies. This is because the standardization of the determination for all European member states also means that a reassessment is required, at least for the German legal entities, particularly in the case of previous indirect control within the framework of group structures. However, the reporting obligations in connection with real estate ownership within the EU also mean operational expenses for both European and foreign companies.