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Fourth AML Directive

Czech Republic: The fourth directive addressing the threat of money-laundering has come into force

25 June 2015 saw the coming into force of the Directive on prevention of the use of the financial system for the purposes of money laundering or terrorist financing, known as the 4th AML Directive, which was passed as part of a package of anti-money-laundering measures.

The scope of the 4th AML Directive encompasses all "obliged entities", i.e., credit and financial institutions, auditors, attorneys, notaries public, accounting and tax advisors, realtors, gambling and betting businesses, etc. In this respect, we note that the 4th AML Directive also affects entities that engage in buying and selling goods. While previous Directives applied to traders who received cash payments of at least EUR 15,000 (e.g. used-car dealerships or luxury goods traders), the 4th AML Directive lowers the threshold to EUR 10,000 - irrespective of whether the transaction is carried out in the form of a single operation or by way of several, manifestly connected operations.

In a departure from previous legislation, the 4th AML Directive no longer differentiates between domestic and foreign politically exposed persons (i.e., private individuals who hold or have in the past held important public offices); PEPs are generally subject to a stricter set of rules. For domestic politicians, high-ranking government officials, members of the highest bodies of the judiciary, but also top managers at state-owned companies, this means that they may expect more stringent checks e.g. by the banks which keep their accounts.

An important new instrument is the central register of ultimate beneficiaries of legal entities and trust funds. Companies that do not observe their duty to disclose adequate, accurate and current information on their ownership structure (including information on the true beneficiaries of such shareholdings) thus become exposed to penalties. In the Czech Republic, this central register will presumably be maintained based upon the Commercial Register.

The individual Member States must transpose the 4th AML Directive into their national law by 26 June 2017.

Source: Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC