Anti-Money Laundering Directive 4 (4 AMLD) and the Regulation on Information Accompanying Transfers of Funds (IFTR)
The 4 AMLD contains rules to combat money laundering and terrorist financing in the European Union (EU). The directive aims at protecting the financial system by means of prevention, detection and investigation of money laundering and terrorist financing by unifying the approach of the EU member states. It is applicable to credit institutions, financial institutions, certain natural or legal persons acting in the exercise of their professional activities (such as auditors, notaries, trust or company service providers, persons trading in goods to the extent that payments are made or received in cash in an amount of € 10,000 or more, providers of gambling services). The aim of the 4 AMLD is, amongst others, to enhance cooperation between – and uniformity within – Member States. The IFTR contains rules to ensure the full traceability of funds transfers within the European Union, as well as funds transfers to and from the European Union. Both the 4 AMLD and the IFTR take into account the recommendations of the Financial Action Task Force (2012).
1Implementation / enforcement 02/2012 - 02/2013
2Discussion / consultation 02/2013 - 05/2015
3Implementation / enforcement 05/2015 - 06/2017
4In effect 06/2017 -
The 4 AMLD stresses a risk-based approach, which requires evidence-based decision making to effectively target the risks of money laundering and terrorist financing. If an obliged entity (i.e. an entity that falls within the ambit of the 4 AMLD) intends to apply simplified customer due diligence, it is required to document its risk assessment. Obliged entities must ensure that their customer files meet the stricter documentation requirements, that the required customer due diligence measures are documented in their policies and procedures and that they are equipped to take remediation actions where necessary. The 4 AMLD contains a broader definition of PEPs and following 4 AMLD, a central register of Ultimate Beneficial Owners will be established. The annexes to the 4 AMLD contain variables and risk factors that obliged entities shall take into account when assessing the risks of money laundering and terrorist financing. The IFTR requires all payment service providers to provide, amongst others, information on the payee in addition to information on the payer.