Transposition of AML V Directive: prevention of money laundering and terrorism financing (Law no. 58/2020)
Legal Alert no. 126 - Law no. 58/2020, of 31, august
On August, 31 2020, Law 58/2020 (the “Law” or “Law 58/2020”) was published in the official public gazette, establishing amendments in the national legal framework, on the measures to combat money laundering and terrorist financing, transposing into local law:
• Directive (EU) 2018/843 of the European Parliament and of the Council, of May, 30 2018, amending Directive (EU) 2015/849, on the prevention of the use of the financial system for money laundering or terrorist financing (“AML V”);
• Directive (EU) 2018/1673 of the European Parliament and of the Council, of October, 23 2018, on combating money laundering by criminal law, to ensure that Member States' legal systems are equipped with consistent and coherent criminal mechanisms and instruments which provide for more efficient cross-border cooperation between the competent authorities.
Law 58/2020 amends various legal diplomas in Portugal, among them:
• Legal Regime of Access and Exercise of the Insurance and Reinsurance Activity, approved in annex I to Law no. 147/2015, of September, 9;
• Law No. 83/2017, of August, 18 ("AML Law");
• Law No. 89/2017, of August, 21 (legal regime of the beneficial owner central register or “RCBE”);
• Law No. 97/2017 of August, 23 (on the application and execution of restrictive measure and sanctions from the UN and the EU);
• The Portuguese Criminal Code, approved by Decree-Law No. 400/82 of September 23;
• The Portuguese Legal Framework on Credit Institutions and Financial Companies approved by Decree-Law 298/92, of December, 31 ("RGICSF").
The most relevant amendments that have been introduced to the AML Law, are the following:
1. The Law increases the list of obliged entities:
• Financial entities: now include credit securitisation fund management companies; ancillary insurance mediators pursuing the distribution of life insurance products; a subtype of investment companies named “sociedades de investimento mobiliário para fomento da economia”; qualified venture capital fund managers; qualified social entrepreneurship investment fund managers; self-management European long-term investment funds (ELTIFs); Portuguese real estate investment and management companies (commonly known as "SIGI");
• Non Financial entities: now include dealers in high-value goods and any entity carrying out “virtual currency” related activities (which include providers engaged in exchange services between virtual currencies and fiat currencies as well as custodian wallet providers). Virtual currency is any digital representation of value that is not necessarily linked to a legally established currency and that does not have the legal status of a fiduciary currency. Regarding the latter, there is now an obligation to register with Bank of Portugal; and,
• Agents of payment institutions, as well as agents and distributors of electronic money of other Member States are now considered entities equivalent to obliged entities for the purposes laid down in Articles 72 and 107 of the AML Law. There is also a reinforcement of their duties and obligations under the new AML Law.
2. The Law introduces the adoption of enhanced customer due diligence measures to be applied by obligated entities in the establishment of business relationships, in occasional transactions, during the course of their business activity, or when entering into business relationships or transactions involving high-risk third countries.
3. Also relevant is the introduction of a prohibition to accept payments through anonymous prepaid cards issued abroad, regardless of the role of the payment service provider (acting as PSP of the payee or of the payer).
4. Regarding the identification and due diligence duty, Law 58/2020 establishes that identification elements can now be verified through electronic means of identification, including electronic qualified signatures, public secure authentication mechanisms made available through the website autenticação.gov.pt, or through the data owner’s consent to the transmission of its data to third parties (provided that the individual is the holder of a Mobile Digital Key and through the usage of a mobile app made available by the Administrative Modernization Agency, IP).
5. For entities in the real estate sector, the Law has introduced a change to the periodic reporting obligation of real estate transactions and lease contracts to IMPIC, I.P. From now on, such transactions must be reported quarterly and are no longer reported every six months.
6. Lastly, in what concerns the sanctions regime set forth in the AML Law, the following amendments have been introduced:
• Criminal offences: the Law provides for the liability of collective entities on the crimes typified in articles 157 and 158 of AML Law;
• Administrative offences: the list of particularly serious administrative offences is extended, highlighting the creation of a paragraph for subsidiary application, which provides for a fine of 3.000 € to 1.000.000 € for legal persons and 1.000 € to 500.000 € for natural persons.
Among the many amendments of the Law, it should also be highlighted the modifications to the Legal Framework of the Effective Beneficiary (“RCBE”), as approved by Law 89/2017, of August, 21, namely the following:
1. It is now necessary to ensure that the information on the beneficial owners contained in the RCBE is made available to the corresponding registers of other Member States, through the European Central Platform created by Article 22(1) of Directive (EU) 2017/1132 of the European Parliament and of the Council.
2. Also relevant for the identification of the beneficial owner is the fact that the RCBE now includes assessment criteria for Collective Investment Undertakings, which is a significant clarification in relation to the previous version of the RCBE regime.
Among the amendments introduced by the Law to the Portuguese Criminal Code, approved by Decree-Law No. 400/82, of September, 23, we would highlight the following;
1. Article 368-A of the PCP extends the typical underlying offences and typical conduct of the money laundering crime, which now covers, for example, the illicit acts of computer fraud, abuse of a warranty or credit card.
2. The penal framework is also aggravated in cases where the offender is an obligated entity and commits the infraction in the exercise of his/her professional activities.
Attached to Law 58/2020 are Laws no. 83/2017 and no. 89/2017 as amended by the new Law.
The law comes into force on the day after its publication: September 1, 2020.
This legal alert does not constitute legal advice. The full legal text is available here.
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