COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a directive of the European Parliament and of the Council amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and amending Directive 2009/101/EC
Date: 2016-07-05
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: administrative transparency, company law, disclosure of information, economic offence, electronic banking, electronic money, exchange of information, fight against crime, money laundering, terrorism

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   EUROPEAN COMMISSION  Strasbourg, 5.7.2016  SWD(2016) 224 final   COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Proposal for a directive of the European Parliament and of the Council amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and amending Directive 2009/101/EC {COM(2016) 450 final} {SWD(2016) 223 final}  
 
 
Executive Summary Sheet 

Impact  assessment  on  a  Proposal for a Directive of the European Parliament and of the Council amending 
Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money 
laundering or terrorist financing 

Why? What is the problem being addressed? 

A. Need for action 

While  Directive  (EU)  2015/849  presents  a  major  step  forward  for  the  prevention  of  money  laundering  and 
terrorist  financing  in  the  EU,  recent  terrorist  attacks  and  disclosures  regarding  certain  deficiencies  in  the 
worldwide  financial  system  ("Panama  papers")  demonstrate  that  further  steps  to  improve  this  framework  are 
needed. In this respect, five problems need to be addressed in relation to the financing of terrorism:  
(1)  Unclear  and  uncoordinated  customer  due  diligence  requirements  resulting  in  less  efficient  monitoring  of 

suspicious transactions involving high risk-third countries;  

(2)  Suspicious transactions made through virtual currencies are not sufficiently monitored by the authorities;  
(3)  Insufficient measures to mitigate risks associated with anonymous prepaid instruments;  
(4)  Limitations in ensuring Financial Intelligence Units' (FIUs) timely access to – and exchange of – information 

held by obliged entities;  

(5)  FIUs  lack  access,  or  have  delayed  access,  to  information  on  the  identity  of  holders  of  bank  and  payment 

accounts.  

The  proposed  amendments  also  address  problems  linked  to  lack  of  access  to  updated  beneficial  ownership 
(BO) information in relation to corporate and legal arrangements. 

What is this initiative expected to achieve? 

The  proposed  amendments  are  expected  to  ensure  more  transparency  and  help  competent  authorities  to 
effectively detect criminal and terrorist financing flows. The amendments should (a) ensure more legal certainty 
for  obliged  entities  as  regards  the  enhanced  customer  due  diligence  measures  which  need  to  be  applied  in 
relation  to  high-risk  third  countries,  (b)  improve  the  detection  of  suspicious  virtual  currency  transactions;  (c) 
reduce  the  misuse  of  anonymous  prepaid  instruments;  (d)  improve  FIUs'  access  to,  and  exchange  of, 
information held by obliged entities; (e) ensure swift access to relevant information on the identity of holders of 
bank  and  payment  accounts  to  prevent  and  detect  transactions  linked  to  money  laundering  and  terrorist 
financing, and (f) enhance transparency of beneficial ownership of corporate and legal arrangements.  

What is the value added of action at the EU level? 

This initiative aims to provide a harmonised approach to swiftly strengthen the EU's existing framework for the 
prevention of money laundering. The lack of an effective preventative legal framework in one Member State may 
be  exploited  by  criminals  and  terrorist,  and  have  consequences  in  another  Member  State.  Therefore,  it  is 
important to have a harmonised framework at EU level. 

B. Solutions 

What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why? 
The  Commission  has  considered  non-legislative  options  such  as  to  formulate  'best  practices'  to  overcome  the 
practical  obstacles  identified  in  an  ongoing  mapping  exercise  and  recommendations  to  Member  States  (on  a 
'comply or explain' basis). However, such options should complement - rather than replace - legislative action. 
A  wide  range  of  regulatory  options  have  been  considered  to  address  the  identified  problems.  The  preferred 
options in the relevant areas are selected to strike a balance between achieving the objectives and the possible 
adverse impacts on market participants, in particular compliance costs. This options include: (i) a prescriptive list 
of  enhanced  customer  due  diligence  measures  to  be  applied  by  obliged  entities  in  combination  with  an 
illustrative list of countermeasures, (ii) bring virtual currency exchange platforms and custodial wallet providers 
under  the  scope  of  the Directive  in combination  with  the creation  of  a system  of  voluntary  self-identification  of 
virtual  currency  users,  (iii)  suppressing  the  anonymity  for  the  online  use  of  reloadable  and  non-reloadable 
prepaid  cards  and  a  reduction  of  the  existing  threshold  for  anonymous  prepaid  cards  when  used  face-to-face 

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(from € 250 to € 150), (iv) a clarification of the legal obligations on FIUs as regards their access to and exchange 
of  information  held  by  obliged  entities,  (v)  an  automated  central  mechanism  at  national  level,  allowing  for  the 
identification  of  bank  and  payment  accounts,  and  (vi)  measures  improving  transparency  and  access  to 
information on beneficial owners of corporate and legal arrangements.  

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)? 

The preferred options will ensure more transparency and help competent authorities to effectively detect criminal 
and terrorist financing flows, and in particular: 

  bring more legal certainty to obliged entities when dealing with customers in high risk third countries,  
 

tackle issues of transparency and limit anonymity for certain identified payment instruments (without wiping 
out the benefits that these instruments offer in their normal use),  

  allow  FIUs  to  have  access  to  more  information  from  obliged  entities  and  swift  access  to  information  that 

identifies bank and payment account holders thus avoiding cumbersome blanket requests 

 

improve  access  by  public  authorities  to  beneficial  ownership  information,  thus  enhancing  transparency  of 
legal arrangements and corporate structures. 

What are the costs of the preferred option (if any, otherwise main ones)?  

Costs  triggered  by  the  proposed  amendments  vary  significantly  from  one  proposal  to  another.  The  proposed 
provision to improve the detection of suspicious virtual currency transactions and increase the transparency of 
such transactions would generate a cost of approximately €10 client.  
Costs  (e.g.  for  setting  up  automated  central  registries  or  electronic  data  retrieval  systems,  will  depend  on  the 
model (one-off costs ranging from €175 000 to €1 200 000) and must be seen in the overall context of achieving 
more transparency and a more rapid and accurate detection of money laundering and terrorist financing. Lifting 
or  reducing  anonymity  for  prepaid  cards  implies  certain  costs  linked  to  complying  with  the  obligations  in  the 
Directive. However, most prepaid card issuers also issue non-anonymous prepaid cards, and therefore already 
have in place the necessary staff and IT systems to comply with these obligations. 

How will businesses, SMEs and micro-enterprises be affected?  

Certain businesses, such as virtual currency exchange platforms and custodial wallet providers will be brought 
under  the  Directive,  which  generates  a  certain  cost,  as  it  will  put  them  under  a  supervisory  regime.  Lifting  or 
reducing anonymity for prepaid cards also implies a certain costs. 

Will there be significant impacts on national budgets and administrations? 
For national authorities, there will be costs for setting up automated central registries or electronic data retrieval 
systems. The cost will depend on the model and based on input received from 5 Member States, one-off costs 
for such tools range from €175 000 to €1 200 000, while yearly recurring costs range from €3 000 to €600000. 

Will there be other significant impacts? 
No 

D. Follow up 

When will the policy be reviewed? 

Two to four years after the adoption of Directive (EU) 2015/849 (i.e. 26 June 2019 - 26 June 2021). 

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