Introduction to the EU AML/CTF legal and regulatory framework for financial services

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Introduction to the EU AML/CTF legal and regulatory framework for financial services
  • Overview of the European AML/CTF regulatory regime
  • What is money laundering and counter terrorist financing under MLD4?
  • European legislative framework
  • MLD4 as amended by MLD5
  • EU Wire Transfer Regulation 2 (EU WTR2)
  • Directive combatting money laundering through criminal law
  • Directive on facilitating access to financial information
  • Directive on combatting terrorism
  • Regulation on controls on cash entering or leaving the EU
  • More...

Introduction to the EU AML/CTF legal and regulatory framework for financial services

Overview of the European AML/CTF regulatory regime

The EU’s anti-money laundering (AML) and counter-terrorist financing (CTF) framework has evolved in line with the work and recommendations of the Financial Action Task Force (FATF), the main international body responsible for combating money laundering (ML), terrorist financing (TF) and other threats to the integrity of the international financial system.

The EU’s AML/CTF framework rests on the Fourth Money Laundering Directive (EU) 2015/849 (MLD4), as amended by the Fifth Money Laundering Directive (EU) 2018/843 (MLD5) and the Directive combatting ML through criminal law (Directive (EU) 2018/1673), and is supplemented by complementary acts, regulatory technical standards (RTS) and guidelines. For further information on the evolution of the EU’s AML/CTF regime, see AML/CTF legal and regulatory regimes for financial services firms—timeline.

It is the responsibility of the Member States to apply and enforce the EU’s AML/CTF rules through national legislation, and to prosecute ML/TF offences. The supervision and enforcement of AML/CTF requirements falls to a number of actors, including: National Competent Authorities as defined under MLD4 (NCAs), which includes national financial supervisors and non-financial supervisors; Financial Investigation Units (FIUs); and law enforcement. Obliged entities, as defined under MLD4, such as financial services providers, must comply with a range of AML/CTF requirements. Requirements include identifying and verifying the identity of customers, monitoring

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