Fifth Money Laundering Directive—what’s changing?
Fifth Money Laundering Directive—what’s changing?

The following Risk & Compliance guidance note provides comprehensive and up to date legal information covering:

  • Fifth Money Laundering Directive—what’s changing?
  • Background
  • Key changes
  • Expansion of the regulated sector
  • High-risk third countries and super-enhanced CDD
  • CDD
  • Politically exposed persons
  • Beneficial ownership registers
  • Defining trusts and similar arrangements
  • Financial services
  • more

The Fourth Money Laundering Directive (4MLD), replacing the Third Directive which had been in force since 2005, was transposed across Europe in June 2017. A mere 13 months later, in July 2018, the Fifth Money Laundering Directive (5MLD) came into force.

It is an ‘Amending Directive’ because it amends 4MLD. The UK government confirmed its commitment to implementing the requirements of 5MLD. This involved the UK government making changes to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692.

The Money Laundering and Terrorist Financing (Amendment) Regulations 2019, SI 2019/1511 were laid before Parliament on 20 December 2019 and are in force from 10 January 2020. See below: Timeline.

This Practice Note sets out the background to the Fifth Money Laundering Directive (5MLD) and the key changes it introduces. It summarises the key changes brought about by the MLR (Amendment) Regulations 2019 and discusses future developments.

Background

Money laundering and terrorist financing present fast-moving, ever-evolving and unpredictable risks. The nature of those risks changed so significantly during the course of negotiations on and implementation period for 4MLD that 5MLD was already on the table before the ink had dried on 4MLD.

Lots happened in that very short space of time:

  1. the Panama Papers revealed the widespread use of trusts and offshore structures to