In May 2020 the European Commission put forward a series of measures designed to further strengthen the EU's framework to fight against money laundering and terrorist financing. The European Commission has introduced an action plan for a Comprehensive EU policy on Preventing Money Laundering and Terrorist Financing, a refined and more transparent methodology to identify high-risk third countries and an updated list of high-risk third countries. Money laundering has become a huge problem worldwide. Money service businesses have become the new vehicle for criminal groups to laundry cash and move it across the borders and inside countries. Thus, AML regulations are tightening towards Money service businesses, making sure that they do everything to prevent criminal activities

With the new measures Electronic Money Institutions (EMIs) which are currently lost with endless correspondence with local EU Member State Financial Intelligence Units (hereinafter- FIUs) should keep in mind that the confusion that they are experiencing is not directed to clear result. Precisely this means unless they accept and implement the new conditions of the 6th Anti Money Laundering Directive (6 AMLD), EMI’s will not be able to find a more economically transparent outlook.

Due to the 5th Anti Money Laundering Directive (5 AMLD) many EMIs in EU are experiencing enhanced enforcement, but the major difference between 5 AMLD and 6 AMLD, is that the concept of personal criminal liability is prevalent in 6 AMLD which will take effect in December 2020. With 6 AMLD EMIs will fall under even more regulatory requirements by the FIUs. With new measures directors and owners of EMIs will be personally criminally liable for AML breaches. In the high-risk industry, EMIs may be permanently shut down and can be blacklisted. Additionally, the license of the EMI may be terminated indefinitely effective the first notification from the local Member State Regulator.

EMIs that are currently under review by their FIU should note that they are required to prepare for the new conditions which will be introduced at the end of the this year and that EMIs should also prepare their employees, which are responsible for compliance, for a more diligent and compliant approach to internal procedure, considering that criminal liability will shift in this December.

Also, EMIs, that co-operating with industries that are considered as high risk, are recommended by the Regulator to require stronger compliance. Similar to many cryptocurrency licenses, EMI are not been forced to comply with new conditions, but it is quite probable that EMIs, especially in the Baltics, will have to follow the lead of the cryptocurrency exchanges.

This is up to the EU Member States to introduce the Directive in local legislation, keeping in mind that Directive require only minimum level of implementation - Member States may decide and have the ability to impose a higher level of enforcement.

Considering proposed changes, it is clear that EMIs will be required to change their attitude, and consider obtaining more licenses in the EU, in addition to transparency and establishing a sustainable regulatory relationship with the respective Member State Regulator and FIU.

Despite of recently introduced measures on EU institutional level, our Offshorelicense team is ready to ensure that regulatory landscape is in the line with technological progress and correspond to the needs of the EU market and help our clients to obtain EMI license in such states like Lithuania and Czech Republic, or find alternative solution outside EU in Mauritius or Georgia.

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