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Legal alert no. 94

On 14 May 2009, the Commission Delegated Regulation (EU) 2019/758, of 31 January 2019, supplementing Directive (EU) 2015/849 (“AML IV Directive”) of the European Parliament and of the Council, with regard to regulatory technical standards for the minimum action and the type of additional measures credit institutions and financial companies must take to mitigate money laundering and terrorist financing risk in certain third countries was published in the Official Journal of the European Union.

Commission Delegated Regulation (EU) 2019/758, of 31 January 2019

On 14 May 2009, the Commission Delegated Regulation (EU) 2019/758, of 31 January 2019, supplementing Directive (EU) 2015/849 (“AML IV Directive”) of the European Parliament and of the Council, with regard to regulatory technical standards for the minimum action and the type of additional measures credit institutions and financial companies must take to mitigate money laundering and terrorist financing risk in certain third countries was published in the Official Journal of the European Union.

The diploma essentially aims at combating obstacles to the compliance with Directive 2015/849 by branches and subsidiaries, which are majority-owned by credit institutions and financial companies of Member States, in third countries where national law does not allow for the implementation of group policies and procedures established in the AML IV Directive. Such may be the case, for example, where the third country’s data protection or banking secrecy legislation limits the group’s ability to access, and therefore process and exchange, information relating to customers of subsidiaries or branches in which it holds a majority stake in the third country.

To this end, the Delegated Regulation lays down a series of general obligations in relation to each third country in which credit institutions and financial companies have established a branch or are majority shareholders of a subsidiary, irrespective of the threats that local from legislation might pose to the EU’s anti-money laundering and terrorism financing system. Risk assessment, the group’s top management involvement and employee training are some of these duties.

Furthermore, it sets out a series of additional measures to combat certain blockages that may result from a conflict between the provisions of the AML IV Directive and a third country’s legislation, in particular with regard to the duties of risk identification and assessment, sharing and processing of customer data, disclosure of suspicious transactions to competent national authorities, transfer of customer data to Member States and record keeping.

In this regard, the Delegated Regulation provides for the need to establish additional policies and procedures to manage the risk of money laundering and terrorism financing effectively. Such additional policies and procedures may include obtaining client consent, which may serve to overcome certain legal obstacles to the implementation of anti-money laundering and terrorism financing policies and group procedures in third countries where other options are limited.

Failure to comply with these additional measures may lead to an obligation to terminate commercial relations, to inhibit occasional transactions, or even to terminate all or part of the activity of a branch or subsidiary in which the credit institution or financial company is a majority shareholder in a third country.

The Delegated Regulation enters into force on 3 June 2019, although it has been agreed that it will only be applicable from 3 September 2019.

To access the full text of the diploma, please click here.

 
 
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