REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities
Date: 2022-10-27
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: banking supervision, economic offence, electronic money, fight against crime, financial transaction, market supervision, money laundering, single market, terrorism financing

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 27.10.2022  COM(2022) 554 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities         {SWD(2022) 344 final}  
 
 
1. 

INTRODUCTION 

The  Financial  Action  Task  Force  (FATF)1  recommends  that  countries  conduct  risk 
assessments  in  each  sector  subject  to  requirements  on  anti-money  laundering  and 
countering  the  financing  of  terrorism  (AML/CFT).  They  should  identify,  assess  and 
understand  money  laundering  and  terrorist  financing  risks,  and  take  commensurate 
preventive measures. 

Acknowledging  the  importance  of  a  supranational  approach  to  risk  identification, 
Directive  (EU)  2015/8492  (the  4th  Anti-money  Laundering  Directive)  as  modified  by 
Directive  (EU)  2018/8433  (the  5th  Anti-money  Laundering  Directive),  hereby  “the 
AMLD”,  mandates  the  Commission  to  conduct  an  assessment  of  specific  money 
laundering  and  terrorism  financing  (ML/TF)  risks  affecting  the  internal  market  and 
relating to cross-border activities. 

The Commission published its first supranational risk assessment (SNRA) in 20174 and 
the  second  in  20195.  The  2022  Commission  SNRA  is  made  up  of  two  documents:  this 
report  and  a  detailed  Staff  Working  Document,  which  read  together  provide  a 
comprehensive  mapping  of  risks  on  all  relevant  areas,  as  well  as  the  necessary 
recommendations to counter them. 

Article 6(1) of the AMLD requires the Commission to update its report every two years 
(or more frequently if appropriate). The current exercise, slightly delayed by the effects 
of  the  COVID-19  pandemic,  re-assesses  all  the  sectors  covered  by  previous  exercises 
and,  where  circumstances  have  not  changed,  updates  and  fine-tunes  the  information 
included in  the 2019 report. For those sectors or products  where relevant  changes have 
been detected, the assessment has also led to a re-calculation of the risk levels involved 
(e.g.: crypto-assets and online gambling, two sectors for which risk is higher now)6. 

As  with  the  previous  reports,  this  third  edition  analyses  the  present  ML/TF  risks  and 
proposes comprehensive action to address them. It also assesses the degree to which the 
Commission’s  recommendations  for  mitigating  measures  in  the  2019  report  have  been 
implemented  and  evaluates  the  remaining  risks.  It  also  benefits  from  the  work  and 
stakeholder  consultation  process  that  led  to  the  adoption  of  the  Commission’s  Action 
Plan of 20207 and the legislative AML/CFT package proposed in 20218.  

1 FATF, National money laundering and terrorist financing risk assessment: 
https://www.fatf-gafi.org/documents/news/nationalmoneylaunderingandterroristfinancingriskassessment.html  
2 Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use 
of  the  financial  system  for  the  purposes  of  money  laundering  or  terrorist  financing,  amending  Regulation  (EU)  No 
648/2012  of  the  European  Parliament  and  of  the  Council,  and  repealing  Directive  2005/60/EC  of  the  European 
Parliament and of the Council and Commission Directive 2006/70/EC (Text with EEA relevance); OJ L 141, 5.6.2015, 
p. 73–117. 
3 Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 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 Directives 2009/138/EC and 2013/36/EU (Text with EEA relevance); OJ L 156, 19.6.2018, p. 
43–74. 
4 COM(2017) 340 final. 
5 COM(2019) 370 final. 
6  Procedure  described  in  the  Methodology  chapter,  Annex  2  of  the  accompanying  Staff  Working  Document 
SWD(2022)344. 
7  Communication  from  the  Commission  on  an  Action Plan  for  a  comprehensive  Union  policy  on  preventing  money 
laundering and terrorist financing (2020/C 164/06); OJ C 164, 13.5.2020, p. 21–33. 
8  COM(2021)  423  final:  https://ec.europa.eu/info/publications/210720-anti-money-laundering-countering-financing-
terrorism_en  

 
      
 
                                                 
The  2021  legislative  package  is  part  of  the  Commission’s  commitment  to  protect  the 
Union’s citizens and financial system from money laundering and terrorist financing. Its 
aim  is  to  improve  the  detection  of  suspicious  transactions  and  activities,  and  close 
loopholes  used  by  criminals  to  launder  illicit  proceeds  or  finance  terrorist  activities 
through  the  financial  system.  It  is  considered  to  be  the  backbone  of  the  mitigating 
measures proposed and the way to address those problems that have been identified as 
having a structural nature and cannot be solely remedied by the previous reviews of EU 
rules in the AML/CFT area. 

This report also prioritises risks and focuses on geographical factors where possible and 
relevant9,  addressing  the  recommendations  made  in  the  13/2021  special  report  of  the 
European Court of Auditors10.  

In  preparing  this  report,  the  Commission  has  carried  out  a  broad  consultation  exercise 
involving as many relevant stakeholders as possible11 in the course of which it addressed 
various sectors through bilateral and sectoral dialogue with representative organisations 
at  EU  level,  national-designated  experts  and  academia.  Due  account  has  been  taken  of 
national  risk  assessments  (NRAs)  produced  by  the  Member  States  and  the  most  recent 
specialized  AML/CFT  publications.  The  Commission  has  also  consulted  other  EU 
agencies and national authorities, such as Europol, the European Bank Authority (EBA), 
and  Financial  Intelligence  Units  (FIUs)  through  the  EU  FIU  Platform12.  These 
consultations have taken place between 2020 and 2022. 

1.1.  The impact of the COVID-19 pandemic  

The  COVID-19  crisis  has  led  to  unprecedented  global  challenges  and  economic 
disruption.  Since  the  World  Health  Organisation  (WHO)  declared  the  COVID-19 
outbreak  as  an  international  pandemic  in  March  2020,  governments  around  the  world 
have put in place various measures in response to the pandemic. These include stimulus 
funds, social assistance and tax relief initiatives, but also different forms of lockdown and 
confinement measures, such as curfews, closure of schools and of retail and hospitality 
outlets, border closures and travel restrictions. The unprecedented changes in individuals’ 
behaviour, prevailing uncertainty and fear, and governmental restrictions have triggered 
shifts  in  criminal  behaviour.  Criminals  have  also  taken  advantage  of  public  support 
programmes. 

The  new  circumstances  have  enhanced  the  money  laundering  risk  in  many  economic 
sectors and business activities. These risks include: 

  misappropriation and fraud on funds granted as financial measures to protect national 
economies  from  the  impact  of  the  pandemic,  or  other  public  funds  granted  in  the 
context of the pandemic; 

9  For  instance,  in  the  assessments  of  Free  Zones  and  Citizenship  investment  programmes  and  investor  residence 
schemes.  
10  Court  of  Auditors,  Special  Report  13/2021  “EU  efforts  to  fight  money  laundering  in  the  banking  sector  are 
fragmented and implementation is insufficient”, 28.06.2021: 
https://www.eca.europa.eu/en/Pages/DocItem.aspx?did=58815  
A  detailed  reference  to  this  Special  report  can  be  found  in  the  Methodology  chapter,  Annex  2  of  the  accompanying 
Staff Working Document. 
11 Stakeholders appear listed under point 8 of the  in the Bibliography section, in Annex 5 of the accompanying Staff 
Working Document. 
12 The network of Financial Intelligence Units. 

2 

 
                                                 
  taking  over  of  businesses  facing  financial  difficulties  by  ill-intentioned  actors  and 

criminal organisations; 

  increased  opportunities  for  criminal  groups  to  obtain  revenues  from  selling 
unauthorised  medical  devices  and  illicit  pharmaceuticals  and  vaccines,  including  to 
governments; 

  cybercrimes  committed  by  taking  advantage  of  the  increasing  volume  of  on-line 

purchases, including through the use of fraudulent identities; and 

  corruption  of  civil  servants  when  taking  urgent  measures,  e.g.  ordering  specific 

medical supplies, and related simplification of procurement rules13. 

Public  authorities  within  the  anti-money  laundering  system,  e.g.  supervisors,  FIUs  and 
law  enforcement  authorities,  had  to  adapt  to  new  modalities  for  conducting  their 
activities, restricting mobility and personal interaction. These included limited or halted 
on-site checks, interviews, and law enforcement missions in other countries for assessing 
cross-border  operations.  This  may  have  reduced  the  capacity  to  conduct  functions 
effectively  in  some  areas.  New  investigative  tools  and  practices  have  been  introduced, 
e.g. on-line interviews and examinations, which limited the impact of the governmental 
measures on the supervisory and investigative capacity of the competent authorities. 

More than two years from the declaration of the pandemic, these phenomena can still be 
observed,  although  their  impact  is  now  more  limited  due  to  greater  awareness  of  these 
criminal  threats,  while  citizens  have  largely  resumed  their  pre-outbreak  behaviour. 
Nevertheless,  criminals  will  adjust  the  modi  operandi  they  employ.  In  the  meantime, 
criminal structures operating in the EU may still benefit from the changes introduced by 
the pandemic and could enhance their capacity. 

1.2.  The Russian war of aggression against Ukraine 

Since  March  2014,  the  EU  has  progressively  imposed  restrictive  measures  (sanctions) 
against  Russia,  initially  in  response  to  the  illegal  annexation  of  Crimea  and  Sevastopol 
and the deliberate destabilisation of Ukraine. On 23 February 2022, the EU expanded the 
sanctions  in  response  to  the  recognition  of  the  non-government  controlled  areas  of  the 
Donetsk and Luhansk oblasts of Ukraine and the ordering of Russian armed forces into 
those areas. Since 24 February 2022, in response to Russia’s military aggression against 
Ukraine,  the  EU  massively  expanded  the  sanctions14.  It  added  a  significant  number  of 
persons  and  entities  to  the  sanctions  list  and  adopted  unprecedented  measures  with  the 
aim  of  significantly  weakening  Russia's  economic  base,  depriving  it  of  critical 
technologies and markets, and significantly curtailing its ability to wage war. 

FATF Paper on COVID-19-related Money Laundering and Terrorist Financing – Risks and Policy Responses:  

13 As described by:  
 
http://www.fatf-gafi.org/publications/methodsandtrends/documents/covid-19-ml-tf.html 
https://www.fatf-gafi.org/media/fatf/documents/Update-COVID-19-Related-Money-Laundering-and-Terrorist-
Financing-Risks.pdf  
 
EUROPOL, “Pandemic profiteering: how criminals exploit the COVID-19 crisis”: 
https://www.europol.europa.eu/cms/sites/default/files/documents/pandemic_profiteering-
how_criminals_exploit_the_covid-19_crisis.pdf  
14 Consolidated text: Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of 
Russia's actions destabilising the situation in Ukraine: 
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02014R0833-20220722  

3 

 
                                                 
In parallel, the EU sanctions regime concerning Belarus15 has been expanded in response 
to that country’s involvement in Russia’s aggression against Ukraine and in addition to 
the  sanctions  already  in  place.  This  sanctions  regime  consists  of  an  array  of  financial, 
economic and trade measures16. 

to  address  any  challenges 

In  order  to  ensure  the  effective  implementation  of  EU  asset  freezing  measures  against 
persons and entities linked to the Russian aggression, the Commission set up the ‘Seize 
and  Freeze’  Task  Force.  The  aim  of  the  Task  Force  is  to  coordinate  actions  taken  by 
Union  bodies  and  national  authorities  and 
the 
implementation of EU sanctions. The Task Force is already delivering significant results: 
Member States have frozen assets amounting to almost EUR 10 billion, which amounts 
to  EUR  32  billion  when  including  the  funds  of  the  Russian  Central  Bank.  The  overall 
impact of the sanctions is already being felt in the Russian economy17. The Task Force 
also  aims  at  facilitating  the  exchanges  among  law  enforcement  authorities  regarding 
investigations  and  confiscation  measures  taken  in  relation  to  potential  crimes  linked  to 
the persons subject to sanctions (including on the circumvention of such sanctions). The 
Task  Force  is  also  exploring  options  for  using  confiscated  assets  for  the  benefit  of  the 
Ukrainian people. 

in 

The  Commission  Recommendation  of  28  March  202218  on  immediate  steps  in  the 
context of the Russian invasion of Ukraine in relation to investor citizenship schemes and 
investor residence schemes urges Member States to reassess naturalisations and residence 
permits  granted  under  such  schemes  to  Russian  and  Belarusian,  to  make  sure  that  they 
are  not  part  of  the  EU’s  list  of  sanctions  in  connection  to  the  war  in  Ukraine.  The 
Commission  also  recommended  suspending  the  issuance  of  residence  permits  under 
investor residence schemes to all Russian and Belarusian nationals. 

According to a recent study carried out through the use of the DATACROS tool funded 
by the Internal Security Fund-Police19, there are almost 31 000 firms in Europe (among 
which real estate, construction, hotels, and the financial and energy sector prevail) with 
Russian  beneficial  owners20.  1  400  of  them  have  ownership  (up  to  5%)  held  by  33 
individuals  subject  to  recent  sanctions  –  the  so-called  oligarchs.  Some  oligarchs  may 
obfuscate their ownership or control of firms through intermediate companies registered 
in non-EU countries21 or local nominee shareholders.  

https://ec.europa.eu/info/business-economy-euro/banking-and-finance/international-relations/restrictive-measures-

15 Council Regulation (EU) 2022/398 of 9 March 2022 amending Regulation (EC) No 765/2006 concerning restrictive 
measures in view of the situation in Belarus and the involvement of Belarus in the Russian aggression against Ukraine; 
OJ L 82, 9.3.2022, p. 1–8. 
Council  Decision  (CFSP)  2022/399  of  9  March  2022  amending  Decision  2012/642/CFSP  concerning  restrictive 
measures in view of the situation in Belarus and the involvement of Belarus in the Russian aggression against Ukraine; 
OJ L 82, 9.3.2022, p. 9–13. 
16 
sanctions/sanctions-adopted-following-russias-military-aggression-against-ukraine_en  
17  https://www.bloomberg.com/news/articles/2022-09-05/russia-risks-bigger-longer-sanctions-hit-internal-report-warns  
18 C(2022) 2028 final. 
19  This  analysis  is  part  of  TOM  –  The  Ownership  Monitor,  a  joint-initiative  by  Transcrime  and  its  spin-off 
Crime&tech: https://www.transcrime.it/en/stories/tom-the-ownership-monitor/ 
20 The TOM study’s criteria is  where the designated individuals “control at least  5% of the share capital, directly or 
indirectly”. 
21 Main non-EU countries used for company registration are British Virgin Islands and the Cayman Islands – but they 
represent only about 2% of all intermediate links: “Inside the matrioska: the firms controlled by sanctioned ‘oligarchs’ 
across European regions and sectors”, Transcrime, March 2022.  

4 

 
                                                 
In fact,  a number of these firms  already presented high-risk indicators before sanctions 
were  issued:  appearing  in  the  Offshore  Leaks  database22,  unjustified  corporate 
complexity, use of opaque legal arrangements or connections with high risk jurisdictions. 
This means that these firms could (and should) have raised alerts among competent and 
supervisory authorities before the recent events. 

Against  this  background,  the  objective  of  the  EU  AML/CFT  framework  to  protect  the 
integrity  of  the  EU  financial  system  contributes  to  protecting  freedom,  justice  and 
security in Europe as a whole. Proper implementation of the EU assets freeze restrictive 
measures23  also  requires  the  effective  enforcement  of  beneficial  ownership  rules  (i.e., 
transparency of business registries and of the corporate domain); the further development 
of 
interconnections  between  different  registers  (beneficial  ownership  registers, 
company/business  registers,  land  registers);  smoother  inter-agency  cooperation  and 
exchange  of  information,  and  the  adequate  detection  and  supervision  of  assets  hidden 
from tax authorities24. Empty shell companies can be created with relative ease, therefore 
they  continue  to  be  used  to  transit  hundreds  of  millions  of  euros  through  opaque 
transactions25.  By  utilising  shell  companies,  criminals  can  conceal  the  origin  and 
destination of funds, in addition to obscuring the real beneficiary of the operation. These 
funds  can  be  used  for  mere  personal  gain  as  well  as  for  the  destabilisation  of  entire 
countries. Thus, shining a light on dirty money flows not only contributes to defending 
democracy  and  the  safety  of  EU  citizens,  but  it  also  helps  countering  the  influence  of 
autocracies.  

The  discussions  in  the  framework  of  the  ‘Freeze  and  Seize’  Task  Force  underline  the 
difficulties  in  identifying  the  assets  controlled  by  oligarchs  as  beneficial  owners,  often 
hidden  behind  complex  legal  structures  across  different  jurisdictions.  This  is  a  major 
challenge  for  the  enforcement  of  sanctions  and  for  law  enforcement  investigative 
activities.  Therefore,  it  is  of  outmost  importance  to  ensure  swift  progress  in  the 
negotiations of the Anti-Money Laundering package so as to ensure beneficial ownership 
information is available to competent authorities. Moreover, given the importance of the 
registers  in  ensuring  the  effective  implementation  of  targeted  financial  sanctions,  it  is 
important  that  Member  States  anticipate  to  the  extent  possible  the  adoption  of  the 
measures  proposed  therein  to  ensure  that  beneficial  ownership  registers  are  sufficiently 
populated.  

2.  OUTCOMES OF THE SUPRANATIONAL RISK ASSESSMENT 

In  this  third  edition  of  the  SNRA,  the  Commission  analyses  the  money  laundering  and 
terrorist  financing  risks  that  43  products  and  services,  grouped  within  eight  categories, 
may pose for the EU internal market. These products and services are those identified by 

22  This  database  contains  information  on  more  than  810  000  offshore  entities  that  are  part  of  the  Pandora  Papers, 
Paradise  Papers,  Bahamas  Leaks,  Panama  Papers  and  Offshore  Leaks  investigations.  The  data  links  to  people  and 
companies in more than 200 countries and territories: https://offshoreleaks.icij.org/  
23  Council  Regulation  (EU)  No  269/2014  of  17  March  2014  concerning  restrictive  measures  in  respect  of  actions 
undermining or threatening the territorial integrity, sovereignty and independence of Ukraine;  OJ L 78, 17.3.2014, p. 
6–15. 
24 In this regard, reference should be made to the Proposal for a COUNCIL DIRECTIVE laying down rules to prevent 
the misuse of shell entities for tax purposes and amending Directive 2011/16/EU; COM/2021/565 final. 
Also, The Commission and Member State tax authorities have set up a subgroup on tax enforcement in the ‘Freeze and 
Seize' Task Force to step up their efforts against sanctioned Russians and Belarusians individuals and companies, as 
well as their associates: 
https://taxation-customs.ec.europa.eu/news/state-tax-authorities-step-tax-enforcement-efforts-support-freeze-and-seize-
task-force-2022-06-08_en  
25 Efforts are in the phase of being stepped up against using shell companies laying down rules in the Commissions 
proposed Council Directive to prevent the misuse of shell entities for tax purposes (COM/2021/565 final).  

5 

 
                                                 
the  AMLD26  along  with  several  others  relevant  for  the  risk  assessment  in light  of  their 
perceived intrinsic risk27. 

These  43  products  and  activities  were  already  assessed  in  the  second  (2019)  SNRA 
edition28,  which  in  turn  constituted  an  updated  and  upgraded  version  of  the 
Commission’s first (2017) report29. They are grouped as follows: 

(1) 

(2) 

(3) 

(4) 
(5) 
(6) 
(7) 
(8) 

Cash-related  products  and  services  (cash  couriers,  cash  intensive  business,  high 
value banknotes, payments in cash and privately owned ATMs). 
Financial  sector  (deposit  on  accounts,  retail  and  institutional  investment  sector, 
corporate banking, private banking, crowdfunding, currency exchange, e-money, 
transfers of funds, illegal transfers of funds, payment services, virtual currencies 
and  other  virtual  assets,  business  loans,  consumer  credit  and  low-value  loans, 
mortgage credits and high-value asset-backed credits, insurance (life and non-life) 
and safe custody services). 
Non-financial products and services (legal arrangements, high value goods, high 
value assets, couriers in precious metals and stones, real estate, services provided 
by accountants and legal services). 
Gambling sector. 
Non-profit organisations. 
Professional sports (professional football). 
Free zones. 
Investor citizenship schemes and investor residence schemes. 

They have been reviewed in the light of the revised Union AML/CFT legal framework 
and,  where  relevant,  the  effects  of  the  COVID-19  pandemic  and  the  sanctions  against 
Russia  and  Belarus.  Where  circumstances  have  not  changed,  the  descriptions  and  the 
assessments  of  the  products  and  services  analysed  in  the  2019  report  have  not  been 
fundamentally modified. 

Thus,  this  assessment  updates  the  information  in  the  2019  report,  fine-tuning  and 
streamlining several  areas (such  as virtual  currencies and  assets and the  analysis of the 
financial sector and non-financial products), and revises figures and information sources. 

2.1.  Main risks in the sectors covered by the supranational risk assessment 

2.1.1.  Cash and cash-like assets 

Although  retail  transactions  in  cash  have  declined,  the  demand  for  euro  banknotes 
appears  to  have  increased,  in  a  trend  referred  to  as  the  “paradox  of  banknotes”,  which 
shows  that  cash  is  still  a  popular  store  of  value  even  in  the  wake  of  the  COVID-19 
pandemic30.  In spite of the changing face of criminality, the criminal  economy  remains 

26 Credit and financial institutions, money remitters, currency exchange offices, high value goods and assets dealers, 
estate agents, trust and company service providers, auditors, external accountants and tax advisors, notaries and other 
independent legal professionals, and gambling service providers. 
27  These  other  product  and  services  are  commonly  covered  by  national  risk  assessments  all  over  the  world.  They 
include the category of cash-related products, and also virtual currencies, crowdfunding and non-profit organisations. 
As  with the previous (2019) SNRA  certain informal  means, such as those used by Hawala and other informal  value 
transfer service providers, professional football, free ports, and investor citizenship and residence schemes have  also 
been assessed. 
28 COM(2019) 370 final. 
29 COM(2017) 340 final. 
30 “The paradox of banknotes: understanding the demand for cash beyond transactional use”, ECB Economic Bulletin, 
Issue  2/2021.  Also,  “Cash  still  king  in  times  of  COVID-19”,  Keynote  speech  by  Fabio  Panetta,  Member  of  the 

6 

 
                                                 
overwhelmingly cash-based, which exposes the EU to significant ML/TF risks due to the 
anonymity  and  relative  ease  of  movement  associated  with  cash  and  cash-like  assets. 
Criminals  seek  to  move  cash  proceeds  to  locations  where  use  or  placement  into  the 
financial system is easier, typically in places where there is a predominant use of cash or 
weak supervision of the financial system. Cash may be further converted to anonymous 
assets  like  pre-paid  cards,  which  are  not  currently  subject  to  controls  at  borders31.  
Reporting is  very low, possibly in  view of the difficulty  of detecting cash transactions. 
The  emergence  of  privately-owned  cash  machines  (ATMs)  increases  the  opportunities 
for criminal organisations to place their proceedings into the financial system undetected.  

The current legal framework in the EU has greatly hindered opportunities for introducing 
large  sums  of  illicitly  generated  cash  into  the  financial  system.  The  Cash  Controls 
Regulation32,  which  entered  into  application  in  June  2021,  increases  the  scope  of  cash 
controls at the EU’s border and enhances authorities’ powers.  

Currently,  19  Member  States  have  implemented  or  are  in  the  process  of  introducing 
limitations to cash payments, but diverging frameworks distort competition and may lead 
to  relocation  of  business  to  Member  States  with  less  rigid  requirements.  The 
Commission’s  Action  Plan  for  a  comprehensive  Union  policy  on  preventing  money 
laundering and terrorist financing33 referred to the introduction of ceilings for large cash 
payments  as  a  potential  means  for  mitigating  ML/TF  risks.  To  this  effect,  the 
Commission’s  proposal  for  a  Regulation  on  the  prevention  of  the  use  of  the  financial 
system for the purposes of money laundering or terrorist financing34 includes a limit on 
large cash payments.  

2.1.2.  Financial sector 

As  with  the  previous  reports,  this  SNRA  covers  within  this  category  a  number  of 
products and sectors (17 in total) that provide financial services to commercial and retail 
customers.  This chapter  comprises  a  broad  range  of  industries,  including  the  banking 
sector,  investment,  insurance,  crowdfunding,  e-money,  transfer  of  funds  (legal  or 
otherwise), crypto-assets, and payment services. 

Most  of  the  threats  and  vulnerabilities  identified  have  already  been  highlighted  in  the 
previous  SNRAs  and  continue  to  be  relevant.  Within  the  financial  sector,  lack  of  clear 
and consistent rules, inconsistent AML/CFT supervision across the internal market, and 
insufficient  coordination  and  exchange  of  information  among  FIUs,  continue  affecting 
the  EU’s  ability  to  correctly  address  ML/TF  risks35.  In  addition,  AML/CFT  competent 

Executive  Board  of  the  ECB,  at  the  Deutsche  Bundesbank’s  5th International  Cash  Conference  –  “Cash  in  times  of 
turmoil”: https://www.ecb.europa.eu/press/key/date/2021/html/ecb.sp210615~05b32c4e55.en.html  
31  In  Regulation 2018/1672  of  the  European Parliament  and  of  the  Council  of  23  October 2018  on  controls  on  cash 
entering or leaving the Union and repealing Regulation (EC) No 1889/2005 OJ L 284, 12.11.2018, p. 6–21, ‘cash’, is 
defined  as  comprising  four  categories:  currency,  bearer-negotiable  instruments,  commodities  used  as  highly-liquid 
stores of value and prepaid cards. For the moment prepaid cards are not covered. However, if there is strong evidence 
that prepaid cards are being used to transfer value across the EU borders circumventing the legislation then a delegated 
act might be adopted to include prepaid cards. 
32 Regulation (EU) 2018/1672 of the European Parliament and of the Council of 23 October 2018 on controls on cash 
entering or leaving the Union and repealing Regulation (EC) No 1889/2005; OJ L 284, 12.11.2018, p. 6–21. 
33 Communication from the Commission on an Action Plan for a comprehensive Union policy on preventing money 
laundering and terrorist financing, C/2020/2800, OJ C 164, 13.5.2020, p. 21–33. 
34 COM(2021) 420 final. 
35 These structural problems are addressed by the 2021 AML/CFT Commission’s proposal: 
https://ec.europa.eu/info/publications/210720-anti-money-laundering-countering-financing-terrorism_en  

7 

 
                                                                                                                                                 
authorities in the Member States often appear to find it difficult to supervise the sector in 
line with a risk-based approach36.  

In line with the Opinion of the European Banking Authority of March 202137, this SNRA 
considers  that  credit  and  payment  institutions,  bureaux  de  change,  e-money  institutions 
and credit providers (other than credit institutions) appear to be most vulnerable to risks 
arising from weaknesses in AML/CFT systems and controls38. 

Risks associated with  crypto-assets  call  for  ensuring not  only  a high level  of consumer 
and  investor  protection  and  market  integrity,  but  also  for  measures  against  market 
manipulation and to prevent ML/TF activities39. Financial stability and monetary policy 
risks  that  could  arise  from  a  wide  use  of  crypto-assets  and  Distributed  Ledger 
Technology (DLT) based solutions in financial markets must also be addressed40.  

The  features  and  nature  of  investment  funds  make  them  vulnerable  to  laundering  of 
proceeds  derived  from  fraud,  tax  crimes,  corruption,  and  bribery41.  The  risk  is  further 
driven  by  the  sector’s  exposure  to  high-risk  clients,  as  well  as  the  high  volume, 
complexity  and  cross-border  nature  of  transactions.  In  an  industry  holding  significant 
value under management, transparency of beneficial ownership is still sub-optimal. 

2.1.3.  Non-financial sector and products  

Under this chapter, the SNRA assesses legal structures under a new approach, departing 
from  previous  reports.  It  focuses  now  on  the  main  vulnerabilities  linked  to  the 
concealment of beneficial ownership (trusts, nominees and companies) and no longer on 
specific  moments  of  the  existence  of  legal  entities  and  legal  arrangements  (creation, 
business  activity,  and  termination).  It  also  considers  the  high-value  goods  market, 
investment in real estate and services provided by accountants, auditors, advisors, and tax 
advisors as well as legal services from notaries and other independent legal professionals.   

2.1.3.1. Non-financial sector and products - Legal entities and arrangements 

Criminals  may  devise  complex  structures  involving  companies  and  legal  entities  to 
obscure financial audit trails, often including the use of shell and front companies. The 
use  of  such  legal  structures  disguises  the  movement  of  illicit  proceeds  as  legitimate 
business  transactions.  Trusts  and  similar  arrangements  provide  opacity  and  hide  the 

36  This  is  in  line  with  the  EBA’s  findings  in  its  first  report  on  competent  authorities’  approaches  to  the  AML/CFT 
supervision of banks which was published in 2020. There is a risk that, in the absence of adequate risk assessments, 
competent authorities may fail to identify, and act upon, ML/TF risks to which their sector is exposed. 
37  Opinion  on  risks  of  money  laundering  and  terrorist  financing  (ML/TF)  affecting  the  European  Union's  financial 
sector; European Banking Authority (EBA), 3.3.2021, EBA/Op/2021/04: 
https://www.eba.europa.eu/sites/default/documents/files/document_library/Publications/Opinions/2021/963685/Opinio
n%20on%20MLTF%20risks.pdf  
This is the third Opinion on the risks of ML/TF affecting the European Union’s financial sector. The EBA issued it as 
part of its new mandate to lead, coordinate and monitor the fight against ML/TF in the financial system at the EU level. 
The  European  Securities  and  Markets  Authority  (ESMA)  and  European  Insurance  and  Occupational  Pensions 
Authority (EIOPA) were closely involved in the process. 
38  In  light  of  the  evolution  of  cross-sectoral  risks.  These  include  risks  associated  with  virtual  currencies,  new 
technologies  (FinTech  and  RegTech),  terrorist  financing,  risks  arising  from  the  withdrawal  of  the  United  Kingdom 
from the EU and de-risking. As explained in detail in chapter 3.1. of the EBA’s report. 
39 Risks addressed by the Commission’s Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND 
OF THE COUNCIL on Markets in Crypto-assets, and amending Directive (EU) 2019/1937, COM/2020/593 final. 
40 Those Commission proposals addressing these issues are detailed in the relevant sections of the accompanying Staff 
Working Document. 
41  For  a detailed  explanation,  consult in  the  Staff  Working  Document  the  sections  assessing  ‘Retail  and  institutional 
investment sector’ and ‘Nominees’. 

8 

 
                                                 
existence of assets from law enforcement authorities and asset recovery offices. A lack of 
cooperation and information-sharing between authorities in different jurisdictions create 
areas  of  weaknesses  that  are  easily  exploitable  by  criminals  seeking  out  jurisdictions 
where AML controls are less effective.  

Complementary  to  such  structures,  the  services  provided  by  nominee  directors  and 
shareholders  may  be  exploited  for  the  purposes  of  obscuring  beneficial  ownership.  For 
example, criminals and persons barred from taking on certain positions in business seek 
the services of formal nominees to conceal their identities, circumvent bans, and remain 
hidden from company documents and registries. 

2.1.3.2. Non-financial sector and products – High value goods 

High  value  goods,  including  arts,  antiquities,  and  precious  metals  and  stones,  are 
commodities  that  permit  the  transfer  of  value.  For  criminals,  this  means  that  illicit 
proceeds may be converted into high value assets that can be moved across borders and 
stored  with  relative  ease  and  little  regulatory  scrutiny.  The  value  of  assets  such  as  arts 
and  antiques  is  often  subjective  and  challenging  to  verify  or  compare.  Therefore, 
inexpensive pieces of art may be sold to accomplices at a highly inflated price, producing 
an invoice that legitimises the transfer of funds. 

Links  between  the  antiquities  trade  and  drug,  wildlife  and  arms  trafficking,  money 
laundering and tax crime and the financing of war machines and terror organisations have 
been  widely  reported,  which  puts  antiquities  trafficking  on  the  level  of  serious 
transnational  organised  crime42.  As  announced  in  the  EU  Strategy  to  tackle  Organised 
Crime  2021-202543,  the  Commission  will  at  the  end  of  2022  adopt  its  action  plan  on 
trafficking in cultural goods, setting out a comprehensive policy approach to disrupt this 
form of crime and to protect cultural goods from harm from criminal activities. 

2.1.3.3. Non-financial sector and products – Service providers 

Service  provider  companies44  remain  at  risk  of  infiltration  or  ownership  by  organised 
crime  groups  to  launder  illicit  proceeds.  Perpetrators  may  take  advantage  of  their 
advisory  services  and  specialised  knowledge  on  the  creation  and  management  of 
structures, as well as their ability to provide documentation and assurances in relation to 
business  activities.  The  respectability  associated  with  certain  professions  makes  them 
attractive targets for launderers, as does their use of client accounts. Professionals may be 
involved unwittingly, but  may  also  be complicit  with  criminals  or wilfully  negligent  in 
complying with their AML/CFT obligations.  

The  exposure  to  risk  is  driven  by  the  involvement  of  such  professionals  in  the 
management  of  complex  legal  situations  and  of  companies  and  legal  arrangements, 
including shell and offshore companies.  

Disparities  in  the  application  of  risk-based  supervision  of  some  sectors  across  Member 
States,  particularly  when  conducted  by  self-regulatory  bodies,  impact  effective 
prevention and the ability to detect misuse. The low number of suspicious transaction or 

42  Refer,  for  all,  to  INTERPOL,  RHIPTO,  and  the  Global  Initiative  Against  Transnational  Organized  Crime:  World 
Atlas of illicit flows, 2018: 
https://www.interpol.int/ar/content/download/14080/file/World%20Atlas%20of%20Illicit%20Flows-1.pdf  
43 COM/2021/170 final. 
44 Professional companies offering services of accountants, auditors, advisors, and tax advisors as well as notaries and 
other independent legal professionals – as described in the relevant assessments in Annex 1 of the accompanying Staff 
Working Document. 

9 

 
                                                 
activity  reports  (STRs  or  SARs)  from  most  Designated  Non-Financial  Businesses  and 
Professions  (DNFBPs)45  across  Member  States  indicates  that  suspicions  are  not  being 
effectively detected and reported.  

The  real  estate  sector  is  also  significantly  exposed  to  money  laundering  risks  and 
particularly vulnerable for tax crime purposes. A Commission study estimated that EUR 
1.4 trillion is held in offshore real estate by EU residents46. Complex financing methods, 
intermediation and the use of corporate vehicles pose challenges to the identification of 
beneficial  ownership.  Studies  by  FATF  and  Egmont  Group  provide  examples  of  the 
complexity of the schemes put in place to conceal the source of funds47. 

As  National  Risk  Assessments  indicate,  service  providers  benefit  the  most  from 
awareness-raising activities, training and enhanced supervision. 

2.1.4.  Common  features  to  the  financial  and  non-financial  (legal  entities 

and arrangements) sectors 

Beneficial ownership weakness continues to remain a considerable threat to the financial 
system. Anonymity remains a critical vulnerability in the international financial system, 
with  banks,  regulators,  and  law  enforcement  authorities  unable  to  quickly  ascertain  the 
true owners of companies. Collective investment undertakings are similarly at risk, as the 
identity  of  end  investors  is  not  usually  transparent,  and  the  use  of  omnibus  accounts48 
further complicates the exchange of information among intermediaries. 

In  the  non-financial  sector,  legal  entities  and  arrangements  are  valued  by  criminals  for 
their ability to enhance anonymity and conceal the identity of beneficial owners, as well 
as  a  means  to  carry  out  their  illicit  activities,  for  example  by  facilitating  logistics  or 
transport of illicit goods. 

Thus,  transparency  of  beneficial  ownership  appears  as  a  crucial  element  in  both  areas. 
The key to addressing anonymity-related risks lies in those initiatives adopted in recent 
years at global level and in particular in the EU, a frontrunner in this respect, to boost the 
transparency  of  firms  and  prevent  their  misuse  by  criminals.  The  establishment  of 
beneficial  ownership  registers49  and  the  increase  of  company  transparency50  are  just  a 
few  examples  of  ongoing  efforts  in  the  fight  against  the  use  of  shell  companies.  In 
addition  to  knowing  who  actually  controls  a  firm,  lifting  the  veil  on  how  firms  are 
controlled  produces  investigative  leads  and  orients  risk  assessment,  boosting  early 
detection of risks, and allowing the understanding of hidden patterns which would not be 
visible with a traditional approach. 

45 DNFBP stands for "Designated Non-Financial Business and Professions"(DNFBP). Certain types of "non-financial" 
businesses, that have been identified as being susceptible to money laundering and terrorist financing due to the nature 
of their business and the transactions with activity that they may conduct. 
46  European  Commission,  Directorate-General  for  Taxation  and  Customs  Union,  Monitoring  the  amount  of  wealth 
hidden by individuals in international financial centres and impact of recent internationally agreed standards on tax 
transparency on the fight against tax evasion: final report, Publications Office, 2021: 
https://data.europa.eu/doi/10.2778/291262  
47 For instance, FAFT and Egmont Group, Concealment of Beneficial Ownership, p. 26, July 2018. 
48 An omnibus account allows for managed trades of more than one person, and allows for anonymity of the persons in 
the account. 
49 In transposition of Article 30 of Directive (EU) 2015/849. 
50 Directive (EU) 2019/1151 as regards the use of digital tools and processes in company law. The Commission is also 
preparing  a  new  initiative  in  the  context  of  company  law  aimed,  among  other  things,  to  include  ex  ante  checks  on 
companies in all Member States. 

10 

 
                                                 
2.1.5.  Gambling sector 

The  gambling  sector  is  characterised  by  fast  economic  growth  and  technological 
development, with a strong growth of the online sector during and after the  COVID-19 
pandemic.  In  this  regard,  a  number  of  competent  authorities  reported  that  risks  arising 
from  online  gambling  have  increased  further  since  the  publication  of  the  last  SNRA  in 
2019.  

For the first time this assessment considers exchangeable tokens used in video games as 
assimilated to crypto-assets51. Therefore, their threat assessment should follow the same 
regime.  

Casinos, for their part, present an inherently high-risk exposure, but their inclusion in the 
AML/CFT  framework  since  2005  has  had  a  mitigating  effect.  Lotteries  and  gaming 
machines  (outside  casinos)  present  a  moderate  level  of  ML/TF  risk.  For  the  former, 
certain  controls  are  in  place,  in  particular  to  address  the  risks  associated  with  high 
winnings. Land-based bingo is seen as presenting a low level of ML/TF risk due to the 
relatively low stakes and winnings involved. 

2.1.6.  Collection  and  transfer  of  funds  through  Non-Profit  Organisations 

(NPOs) 

the  categories  of  non-profit  organisations  set  out 

This  report  covers 
the 
Recommendation of the Financial Action Task Force52. This risk scenario relates to the 
collection  and  transfer  of  funds  by  NPOs  within  the  internal  market,  as  well  as  to  the 
collection of funds for transfer to and from third countries. 

in 

The  heterogeneity  of  the  NPO  sector  and  sub-sectors  presents  a  challenge  to  the 
assessment  of  risks.  The  nature  and  level  of  both  money  laundering  and  terrorism 
financing risks may vary depending on the funding sources, disbursement  methods and 
channels,  and  the  beneficiaries  of  funds.  NPOs  providing  humanitarian  aid  tend  to 
operate  in  areas  of  conflict  or  crisis,  where  at  times  armed  groups  or  individuals 
designated as terrorists may be present. De-risking by financial institutions places NPOs 
at  risk  of  financial  exclusion,  and  the  difficulty  of  accessing  formal  banking  channels 
further increases the risk53.  

NPOs have become more aware of the risks they face, with an increase in investment in 
compliance and audit functions being noted among well-established NPOs. There exists 

51 Money launderers may use the digital sale of these tokens in the same  way they use physical sales.  Illegal money 
may  be  used  to  purchase  and  then  sell  them,  thus  cleaning  the  dirty  money.  As  an  example:  https://archive-
yaleglobal.yale.edu/content/money-laundering-video-games-financial-times  
52  ‘A  legal  person or  arrangement  or  organisation  that primarily  engages  in  raising  or disbursing  funds  for  purposes 
such as charitable, religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of 
“good works”:  
http://www.fatf-gafi.org/media/fatf/documents/reports/BPP-combating-abuse-non-profitorganisations.pdf   
53  Where  a  financial  institution  takes  a  decision  to  refuse  to  enter  into,  or  to  terminate,  business  relationships  with 
individual  customers  or  categories  of  customers  associated  with  higher  ML/TF  risk,  or  to  refuse  to  carry  out  higher 
ML/TF  risk  transactions,  this  is  referred  to  as  ‘de-risking’.  According  to  the  Opinion  of  the  European  Banking 
Authority on ‘de-risking’, EBA/Op/2022/01), de-risking can be a legitimate risk management tool, but it can also be a 
sign  of  ineffective  ML/TF  risk  management,  with  possible  severe  consequences.  EBA  considers  that  its  regulatory 
guidance on how to manage ML/TF risks, if applied correctly, should help avert unwarranted de-risking: 
https://www.eba.europa.eu/sites/default/documents/files/document_library/Publications/Opinions/2022/Opinion%20on
%20de-risking%20%28EBA-Op-2022-
01%29/1025705/EBA%20Opinion%20and%20annexed%20report%20on%20de-risking.pdf 

11 

 
                                                 
room  for  more  collaboration  and  outreach  by  Member  States  to  the  financial  sector  to 
facilitate access by NPOs to regulated channels.  

Almost all Member States have in place some form of supervision, whether through NPO 
regulatory bodies, tax authorities, or other types of supervisory authorities. Due diligence 
procedures for registration and access to financial services have become more stringent, 
potentially making NPOs less attractive for terrorism financing purposes.  

2.1.7.  Professional sports 

Like  many  other  businesses,  sport  has  been  used  by  criminals  to  launder  money  and 
derive  illegal  income.  Football,  being  by  far  the  most  popular  sport  in  the  world,  is  an 
obvious  candidate.  As  in  the  art  world,  criminals  in  the  sports  world  are  not  always 
motivated  by  economic  gain.  Social  prestige,  association  with  celebrities,  and  the 
prospect of dealing with authority figures may also attract criminal investment. 

The  COVID-19  pandemic  has  had  a  devastating  effect  on  club  finances,  resulting  in 
several  growing  trends  which  could  put  the  sector  at  greater  risk.  Due  to  insufficient 
resources  and  training,  this  sector  is  still  vulnerable  to  money  laundering  and,  to  a  far 
lesser  extent,  terrorist  financing.  The  sector’s  own  legal  framework  has  increased  the 
checks applied, however that framework alone is inadequate. Transparency at all levels, 
from player transfers to club ownership, is essential for reducing this sector’s risk level. 

2.1.8.  Free trade zones 

Free  trade  zones  continue  being  regarded  as  presenting  high  money  laundering  and 
terrorist  financing  risks  as  they  offer  a  number  of  advantages  from  a  customs  and 
taxation perspective. This may make them more likely to facilitate predicate offences or 
abuse. Although the risks assessed are applicable to all free zones and, to a lesser extent, 
customs  warehouses,  they  are  exacerbated  in  the  case  of  high-value  goods  held  in  free 
ports.  Pointing  at  the  rapid  growth  in  the  high-end  of  the  art  market  and  the  physical 
expansion of luxury storage spaces, a research paper suggests that luxury free ports are 
establishing themselves as new players in the global system of tax avoidance and crime54. 

In  addition,  free  trade  zones  continue  to  pose  a  counterfeiting  threat,  as  they  allow 
counterfeiters to land consignments, adapt or otherwise tamper with loads or associated 
paperwork  and  then  re-export  the  products  without  customs  intervention,  and  thus 
disguise the true origin and nature of the goods, and the identity of the original supplier. 

There is room to improve the regulation of EU free zones. The Commission’s proposal 
for a Regulation on the prevention of the use of the financial system for the purposes of 
money laundering or terrorist financing, adopted in July 2021, clarifies the scope of the 
entities  covered55.  The  Commission  is  currently  undertaking  an  evaluation  of  EU  free 
zones.  Among  other  analyses,  this  evaluation  assesses  the  benefits  and  costs  of  free 
zones, including the risk of possible misuse, both in the customs and taxation area.   

2.1.9.  Investor citizenship and investor residence schemes 

Investor  citizenship  and  residence  schemes  aim  to  attract  investment  in  a  country  by 
granting  citizenship  or  residence  rights  in  exchange  for  pre-determined  payments  or 

https://www.taxobservatory.eu/repository/the-new-luxury-freeports-offshore-storage-tax-avoidance-and-invisible-

54 
art/  
55 The proposal aims to widen the scope of obliged entities who trade and store art to customs warehouses. 

12 

 
                                                 
investments in the country concerned. Such schemes are attractive as they facilitate travel 
and  conduct  of  business,  but  can  be  subject  to  misuse  for  the  purposes  of  money 
laundering,  tax  crime  and  corruption  and  may  also  raise  security  risks.  A  second 
citizenship  may  facilitate  the  movement  of  ill-gotten  proceeds  and  the  concealment  of 
assets from  competent  authorities. Concerns may also  arise on the lack of transparency 
and governance of the schemes.  

In October  2020, the Commission took  steps56 with respect  to  the three Member States 
that  operated  investor  citizenship  schemes  at  that  time,  based  on  concerns  that  those 
Member  States  failed  to  fulfil  their  EU  law  obligations  in  relation  to  the  principle  of 
sincere  cooperation57  and  the  concept  of  citizenship  of  the  Union58.  The  nature  of  EU 
citizenship, and the rights attached to it, imply that such schemes are not  limited to the 
Member State that naturalises an investor, but affect all Member States and the EU as a 
whole.  The  Commission  has  explicitly  stated  that  the  granting  of  nationality,  and  by 
extension  EU  citizenship,  in  return  for  pre-determined  payments  or  investments,  and 
without  any  genuine  link  between  the  Member  State  concerned  and  the  investor, 
undermines  the  integrity  of  EU  citizenship  as  well  as  the  principle  of  sincere 
cooperation59. 

Only  one  Member  State  continues  to  operate  an  investor  citizenship  scheme60.  The 
Commission  pursued  its  infringement  procedure  against  this  Member  State  in  April 
202261. 

However, investor residence schemes are offered by 19 Member States. 

The Commission’s proposal for a Regulation on the prevention of the use of the financial 
system for the purposes  of money laundering or terrorist financing states that operators 
who are involved on behalf of third-country nationals in the context of investor residence 
schemes  will  be  captured  as  obliged  entities.  Actors  involved  in  investor  citizenship 
schemes  are  not  included  in  the  proposal  given  the  Commission’s  concerns  regarding 
their incompatibility with EU law62.  

The risks of such schemes have recently been highlighted in the context of the Russian 
aggression against Ukraine, as nationals subject to sanctions or significantly supporting 
the  war  against  Ukraine  may  have  acquired  EU  citizenship  or  residence  permits  in 
Member  States.  As  investor  citizenship  schemes  are  in  breach  of  EU  law,  the 
Commission  has  urged  Member  States  to  immediately  repeal  investor  citizenship 

56  On  20  October  2020  the  European  Commission  launched  infringement  procedures  against  Cyprus  and  Malta  by 
issuing letters of formal notice regarding their investor citizenship schemes. The Commission also wrote to Bulgaria 
about its investor citizenship scheme in October 2020.  
57 Article 4(3) TFEU. 
58 Article 20 TFEU.  
59  Report  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European  Economic  and  Social 
Committee  and  the  Committee  of  the  Regions,  ‘Investor  citizenship  and  residence  schemes  in  the  EU’,  23.1.2019, 
COM(2019) 12 final:  
https://ec.europa.eu/info/files/report-commission-european-parliament-council-european-economic-and-social-
committee-and-committee-regions-investor-citizenship-and-residence-schemes-european-union_en 
60  Malta.  However,  in  March  2022  Malta  temporarily  suspended,  until  further  notice,  its  scheme  for  Russian  and 
Belarusian  nationals.  Bulgaria  abolished  its  citizenship  by  investment  programme  in  March  2022,  which  became 
effective  in  April  2022.  Cyprus  suspended  its  citizenship  for  investment  scheme  in  2020  and  finished  handling  all 
pending applications in 2021. 
61  https://ec.europa.eu/commission/presscorner/detail/en/IP_22_2068  
62 Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the prevention 
of the use of the financial system for the purposes of money laundering or terrorist financing, 20.7.2021, COM(2021) 
420 final. 

13 

 
                                                 
schemes. It has also called on Member States to ensure that investor residence schemes 
are subject to rigorous checks63.    

Furthermore,  as  part  of  the  actions  taken  to  address  the  risks  of  investor  residence 
schemes, the Commission also adopted on 27 April 2022 a proposal to recast the Long-
Term  Residents  Directive.  The  proposal  includes,  among  other  things,  rules  to  prevent 
that third-country investors abusively acquire the EU long-term resident status. For this 
purpose, it includes a provision to strengthen checks on the residence requirement, with 
particular  regard  to  applications  for  EU  long-term  resident  status  submitted  by  persons 
holding  and/or  having  held  a  residence  permit  granted  on  the  basis  of  any  kind  of 
investment in a Member State.  

3.  MITIGATING MEASURES 

3.1.  Mitigating measures under the 5th Anti-Money Laundering Directive 

The  5th  Anti-Money  Laundering  Directive,  whose  transposition  deadline  elapsed  in 
January 202064, has equipped the EU with tools allowing it to more effectively prevent 
its financial system from being used for ML/TF, in particular through:  

  improving transparency through public beneficial ownership registers for companies, 

and publicly available registers for trusts and other legal arrangements;  

  limiting anonymity offered by virtual currencies, wallet providers and pre-paid cards; 
  broadening  the  criteria  for  the  assessment  of  high-risk  countries  and  improving  the 

safeguards for financial transactions to and from such countries;  

  requiring Member States to set up central bank account registries or retrieval systems;  
  improving anti-money laundering supervisors’ cooperation and information exchange 

with each other and with prudential supervisors and the European Central Bank.  

These  measures  are  expected  to  further  contribute  to  lowering  risk  levels  in  the 
concerned sectors and products. The Commission is reviewing compliance with the new 
provisions and will publish an implementation report in 2022. 

3.2.  EU mitigating measures already in place or in the pipeline 

3.2.1.  Legislative measures 

Most  legislative  measures  referred  to  in  the  two  previous  SNRAs  have  already  been 
adopted, notably:  

  the 5th Anti-Money Laundering Directive,  
  the new Cash Controls Regulation65,  
  the Directive on Countering Money Laundering by Criminal Law66,  
  the Regulation on the introduction and the import of cultural goods67,  
  the Directive on access to financial and other information68, 

63 Commission Recommendation of 28.3.2022 on immediate steps in the context of the Russian invasion of Ukraine in 
relation to investor citizenship schemes and investor residence schemes; C(2022) 2028 final. 
64 At the moment of the preparation of this report all member States have reported full transposition. 
65 Regulation (EU) 2018/1672 of the European Parliament and of the Council of 23 October 2018 on controls on cash 
entering or leaving the Union and repealing Regulation (EC) No 1889/2005, OJ L 284, 12.11.2018, p. 6–21. 
66 Directive (EU) 2018/1673 of the European Parliament and of the Council of 23 October 2018 on combating money 
laundering by criminal law, OJ L 284, 12.11.2018, p. 22–30. 
67 Regulation (EU) 2019/880 of the European Parliament and of the Council of 17 April 2019 on the introduction and 
the import of cultural goods; OJ L 151, 7.6.2019, p. 1–14. 

14 

 
                                                 
  the revision of the European Supervisory Authorities Regulations69,  
  the adoption of Directive (EU) 2019/217770, which amends the Solvency II Directive, 

the MiFID II Directive and the 4th Anti-Money Laundering Directive, and 

  the adoption of the 5th Capital Requirements Directive71, which removes the obstacles 
to cooperation between prudential and anti-money laundering/countering the financing 
of terrorism supervisors. 

3.2.2.  The legislative proposals 

the 
As  mentioned  under  Section  1 
Commission presented  a  package  consisting  of  four  legislative  proposals  to  strengthen  the  EU 
AML/CFT provisions: 

(“Introduction”)  above,  on  20 

July  2021, 

  A  Regulation  establishing  a  new  EU  AML/CFT  Authority  (“the  AMLA 

Regulation”)72; 

  A  Regulation  on  AML/CFT,  containing  directly-applicable  rules,  including  in  the 
areas  of  Customer  Due  Diligence  and  Beneficial  Ownership  (“the  AML/CFT 
Regulation”)73; 

  A  sixth  Directive  on  AML/CFT  (“AMLD6”),  replacing  the  existing  Directive 
2015/849/EU  (the  fourth  AMLD  as  amended  by  the  fifth  AMLD),  containing 
provisions  that  will  be  transposed  into  national  law,  such  as  rules  on  national 
supervisors and FIUs in Member States74; and 

  A revision of the 2015 Regulation on Transfers of Funds to trace transfers of crypto-

assets (Regulation 2015/847/EU) (“the Transfers of Funds Regulation”)75. 

The  proposed  AML/CFT  Regulation  would  constitute  the  central  element  of  what  is 
commonly  referred  to  as  an  EU  'single  rulebook'  on  AML/CFT.  It  would  replace  the 
minimum rules of the EU AML Directives currently in  force with detailed and directly 

68  Directive  (EU)  2019/1153  of  the  European  Parliament  and  of  the  Council  of  20  June  2019  laying  down  rules 
facilitating  the  use  of  financial  and  other  information  for  the  prevention,  detection,  investigation  or  prosecution  of 
certain criminal offences, and repealing Council Decision 2000/642/JHA, OJ L 186, 11.7.2019, p. 122–137. 
69  Regulation  (EU)  2019/2175  of  the  European  Parliament  and  of  the  Council  of  18  December  2019  amending 
Regulation  (EU)  No 1093/2010  establishing  a  European  Supervisory  Authority  (European  Banking  Authority), 
Regulation (EU) No 1094/2010 establishing a European Supervisory Authority (European Insurance and Occupational 
Pensions  Authority),  Regulation  (EU)  No 1095/2010  establishing  a  European  Supervisory  Authority  (European 
Securities and Markets Authority), Regulation (EU) No 600/2014 on markets in financial instruments, Regulation (EU) 
2016/1011  on  indices  used  as  benchmarks  in  financial  instruments  and  financial  contracts  or  to  measure  the 
performance  of  investment  funds,  and  Regulation  (EU)  2015/847  on  information  accompanying  transfers  of  funds 
(Text with EEA relevance); OJ L 334, 27.12.2019, p. 1–145. 
70 Directive (EU) 2019/2177 of the European Parliament and of the Council of 18 December 2019 amending Directive 
2009/138/EC  on  the  taking-up  and  pursuit  of  the  business  of  Insurance  and  Reinsurance  (Solvency  II),  Directive 
2014/65/EU  on  markets  in  financial  instruments  and  Directive  (EU)  2015/849  on  the  prevention  of  the  use  of  the 
financial  system  for  the  purposes  of  money-laundering  or  terrorist  financing  (Text  with  EEA  relevance);  OJ  L  334, 
27.12.2019, p. 155–163. 
71  Directive  (EU)  2019/878  of  the  European  Parliament  and  of  the  Council  of  20  May  2019  amending  Directive 
2013/36/EU  as  regards  exempted  entities,  financial  holding  companies,  mixed  financial  holding  companies, 
remuneration, supervisory measures and powers and capital conservation measures (Text  with EEA relevance); OJ L 
150, 7.6.2019, p. 253–295. 
72 Proposal for a REGULATION  OF THE EUROPEAN PARLIAMENT  AND OF THE COUNCIL establishing the 
Authority for Anti-Money Laundering and Countering the Financing of Terrorism and amending Regulations (EU) No 
1093/2010, (EU) 1094/2010, (EU) 1095/2010, COM/2021/421 final. 
73 Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the prevention 
of the use of the financial system for the purposes of money laundering or terrorist financing, COM/2021/420 final. 
74 Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the mechanisms to 
be put in place by the Member States for the prevention of the use of the financial system for the purposes of money 
laundering or terrorist financing and repealing Directive (EU) 2015/849, COM/2021/423 final. 
75  Proposal  for  a  REGULATION  OF  THE  EUROPEAN  PARLIAMENT  AND  OF  THE  COUNCIL  on  information 
accompanying transfers of funds and certain crypto-assets (recast), COM/2021/422 final. 

15 

 
                                                                                                                                                 
applicable provisions. The main issues addressed by the proposal include: the obligations 
imposed  on  entities  required  to  prevent  money  laundering  (‘obliged  entities’); 
transparency  of  information  regarding  persons  owning  or  controlling  the  customers  of 
such  entities;  and  the  misuse  of  anonymous  instrument  (such  as  crypto-assets).  The 
Regulation  would  thus  extend  the  list  of  obliged  entities  to  include  all  crypto-asset 
service providers – as recommended by the Financial Action Task Force (FATF)  – and 
streamline  beneficial  ownership  requirements  across  the  EU.  It  would  also  restrict 
transactions  in  cash,  setting  at  EUR  10  000  a  maximum  cap  for  accepting  or  making 
payments in cash by persons trading in goods or providing services. Moreover, it would 
harmonise  the  EU  approach  to  third  countries  with  strategic  deficiencies  in  their 
AML/CFT regimes. 

The  Commission  proposed  to  task  the  AML/CFT  Authority  with  direct  supervisory 
powers  and  should  be  operational  in  2024.  The  Authority  should  start  exercising  its 
supervisory  powers  once  the  AMLD6  has  been  transposed  and  the  new  rules  start  to 
apply. 

The legislative package is being discussed by the European Parliament and the Council, 
and the Commission is hopeful for a speedy legislative process.  

3.2.3.  Further supporting measures 

The European Commission continues its work related to: 

  Improving  statistical  data  collection.  Since  January 2020  the  Commission  has, 
pursuant to Article 44 of the AMLD, been obliged to collect and subsequently report 
on  national  statistics  on  matters  relevant  to  the  effectiveness  of  the  Member  States’ 
systems to combat money laundering and terrorist financing. A methodology to collect 
and estimate quantitative volumes of money laundering is also to be developed.  

  Training  for  professionals  carrying  out  activities  covered  by  ‘legal  privilege’.  
The  Commission  has  been  providing  guidance  and  practical  insights  to  help  them 
recognise  possible  ML/TF  operations  and  how  to  proceed  in  such  cases.  An  EU 
funded project for training of lawyers has taken place between 2020 and 202276. 

  Raising public awareness about ML/TF risks. 
  Further  monitoring  of  currency  counterfeiting  and  its  possible  links  to  money 
laundering. The Pericles IV programme77 funds staff exchanges, seminars, trainings 
and studies for law enforcement and judicial authorities, banks and others involved in 
combating  euro-counterfeiting.  Actions  can  take  place  in  the  euro  area,  in  EU 
countries outside the euro area and in third countries. 

4.  RECOMMENDATIONS AND FOLLOW-UP 

Having  assessed  the  risks  in  light  of  the  updated  legal  framework  and  the  proposals 
presented  in  its  legislative  package,  the  Commission  considers  that  a  series  of  other 
mitigating measures should be taken at EU and Member State level, taking into account:  

  ML/TF risk levels;  
  the  need  to  take  action  at  EU  level  or  to  recommend  that  Member  States  take 

action (subsidiarity); 

  the need for regulatory or non-regulatory measures (proportionality); and  

76 Training manuals can be found here: https://ec.europa.eu/info/publications/aml-CFT-lawyers-training-manuals_en  
77 https://ec.europa.eu/info/business-economy-euro/euro-area/anti-counterfeiting/pericles-iv-programme_en  

16 

 
                                                 
  the impact on privacy and fundamental rights.  

The  Commission  has  also  taken  into  account  the  need  to  avoid  any  abuse  or 
misinterpretation  of  its  recommendations  that  would  result  in  de-risking,  i.e.:  the 
exclusion  of  entire  classes  of  customers  and  the  termination  of  customer  relationships, 
without taking full and proper account of the level of risk in a particular sector. This can 
leave customers without access to the financial system. As highlighted by the EBA, de-
risking can be a legitimate risk management tool in some cases but it can also be a sign 
of  ineffective  money  laundering  and  terrorist  financing  risk  management,  with  severe 
consequences78. 

The following sections thus make recommendations at both EU and Member State level 
while also following up on the progress made to address the recommendations set out in 
previous SNRAs.  

4.1.  Recommendations to the European Supervisory Authorities (ESAs) 

4.1.1.  The European Commission’s ‘call for advice on defining the scope of 
application and the enacting terms of a regulation to be adopted in 
the field of preventing anti‐money laundering and terrorist financing’ 

In  March  2020,  the  Commission  services  requested  advice  from  the  EBA  on  the  areas 
where  AML/CFT  rules  could  be  strengthened.  The  EBA  provided  its  opinion  on  10 
September 202079.  

The  EBA  recommended  that  the  Commission  proposes  harmonizing  aspects  of  the 
current  EU  AML/CFT  framework  where  divergence  of  national  rules  has  resulted  in 
significant  adverse  impact,  such  as  customer  due  diligence  measures,  internal  control 
systems,  supervisory  risk  assessments,  cooperation  and  enforcement.  The  EBA  further 
suggested that the EU strengthen aspects of its legal framework where vulnerabilities are 
detected,  specifically  with  reference  to  the  powers  of  AML/CFT  supervisors  and 
reporting requirements. 

The  EBA  recommended  that  the  list  of  obliged  entities  be  expanded  and  clarified,  in 
particular with regard to crypto-asset service providers, investment firms and investment 
funds.  It  also  suggested  clarifying  provisions  in  sectoral  financial  services  legislation 
(notably  payment  services,  financial  services  and  deposit  guarantee  schemes)  to  ensure 
they are compatible with the EU’s AML/CFT objectives.  

This input has been integrated throughout the Commission’s legislative proposals. 

4.1.2.  Follow-up 

to 

the 

2019 

Supranational  Risk  Assessment 

Recommendations 

In  the  2019  report,  the  Commission  recommended  that  the  European  Supervisory 
Authorities should: 

78 In March 2021 The European Banking Authority (EBA) published three regulatory instruments to address de-risking 
practices  based  on  evidence  gathered  in  its  call  for  input:  https://www.eba.europa.eu/eba-takes-steps-address-
%E2%80%98de-risking%E2%80%99-practices  
79 Opinion of the European Banking Authority on the future AML/CFT framework in the EU, EBA/OP/2020/14: 
https://www.eba.europa.eu/sites/default/documents/files/document_library/Publications/Opinions/2020/931092/Opinio
n%20on%20the%20future%20AML%20CFT%20framework%20in%20the%20EU.pdf  

17 

 
                                                 
  provide  updated  guidelines  on  internal  governance  so  as  to  further  clarify 
expectations around the functions of compliance officers in financial institutions; 

As  a  result,  the  EBA  has  developed  guidelines  on  the  role  and  responsibilities  of  the 
AML/CFT  compliance  officer80.  These  guidelines  specify the 
tasks  and 
responsibilities  of  AML/CFT  compliance  officers and  the  management  body  and  how 
they interact, including at group level. They apply to all financial sector operators that are 
within the scope of the AML Directive. 

role, 

4.2.  Recommendations to non-financial supervisors 

This assessment has found that the threats and vulnerabilities previously detected in the 
non-financial  area  are  still  largely  applicable.  Thus,  the  Commission  reiterates  the 
recommendations of the previous SNRA for self-regulatory bodies, notably to carry out 
more thematic inspections, raise the level of reporting, and continue to organise training 
schemes to develop understanding of AML/CFT risks and compliance obligations. 

4.3.  Recommendations  to  Member  States  (national  authorities  and/or 

national supervisors) 

4.3.1.  Follow-up 

to 

the 

2019 

Supranational  Risk  Assessment 

Recommendations 

Under Article 6(4) of the Anti-Money Laundering Directive, if Member States decide not 
to  apply  any  of  the  recommendations,  they  should  notify  the  Commission  of  their 
decision  and  provide  a  justification  for  it  (‘comply  or  explain’).  To  date,  no  Member 
State  has  made  such  a  notification  to  the  Commission  as  concerns  the  2019 
recommendations.  

It  is  important  to  note  that  the  legal  obligations  of  the  5th  Anti-Money  Laundering 
Directive supersede, either totally or in part, previous recommendations, in particular as 
regards increased transparency of beneficial ownership, reduced thresholds for customer 
due diligence in some sectors, or extending the list of obliged entities. 

The  following  section  details  several  aspects  fundamental 
recommendations. 

to 

the  Commission 

(1) 

Scope of national risk assessments 

Previous  reports  identified  cash  intensive  businesses  and  payment  in  cash,  the  NPO 
sector and electronic money products as areas to which Member States should give due 
consideration  in  their  national  risk  assessments  and  for  which  they  should  define 
appropriate mitigating measures.  

For  this  exercise  the  Commission  has  to  date  received  the  most  recent  national  risk 
assessments from 25 Member States81. The remaining Member States are encouraged to 
urgently submit them following this recommendation. 

This  report  reminds  the  national  authorities  of  their  obligation  to  keep  their  risk 
assessment up to date. This report also maintains the 2019 recommendation and calls on 

80 https://www.eba.europa.eu/eba-publishes-guidelines-role-and-responsibilities-amlcft-compliance-officer  
81 Portugal and Romania are yet to send their national risk assessments to the Commission. National risk assessments 
have also been received from Iceland, and Norway. 

18 

 
                                                 
all  Member  States  to  ensure  that  their  national  risk  assessments  cover  the  risks 
associated  with  the  mentioned  products  and  sectors  and  to  provide  for  the  appropriate 
mitigating measures. 

(2) 

Beneficial ownership 

A high level of transparency of beneficial ownership information is crucial in combating 
the misuse of legal entities. Public access to this information can allow greater scrutiny of 
information  by  civil  society,  including  by  the  press  or  civil  society  organisations,  and 
contributes  to  preserving  trust  in  the  integrity  of  the  financial  system.  Confidence  in 
financial markets from investors and the general public depends in part on the existence 
of an accurate disclosure regime that provides transparency in  the beneficial ownership 
and control structures of companies. 

For  these  reasons  the  2019  report  maintained  the  2017  recommendation  to  Member 
States  that  the  information  on  the  beneficial  ownership  of  legal  entities  and  legal 
arrangements should be adequate, accurate and up to date. In particular, tools should be 
developed to ensure that the identification of beneficial ownership is done when applying 
customer due diligence measures and that the sectors most exposed to risks from opaque 
beneficial ownership schemes are effectively monitored and supervised. 

As  long  as  public  registers  are  not  fully  implemented  and  difficulties  in  accessing 
information  persist, the flow of dirty money  remains a real  risk for the EU as a whole. 
Consequently, this  report  maintains  the 2019 recommendation and encourages Member 
States to fully implement the provisions set out in the Anti-Money Laundering Directive 
related to beneficial ownership registers.  

The  Commission  is  currently  assessing  the  implementation  of  national  beneficial 
ownership  registers  through  dedicated  questionnaires  in  the  context  of  its  horizontal 
assessment of the implementation of AMLD5 and follows attentively the developments 
of this key element of the EU AML/CFT legal framework82. 

Moreover,  in  view  of  the  Russian  aggression  to  Ukraine,  Member  States  should 
anticipate  to  the  extent  possible  the  adoption  of  the  measures  proposed  in  the  Anti-
Money  Laundering  package  to  ensure  that  beneficial  ownership  registers  contain 
comprehensive information.  

(3) 

Appropriate resources for AML/CFT supervisors and FIUs 

Article  32  of  the  AMLD  requires  Member  States  to  provide  their  FIUs  with  adequate 
financial, human and technical resources in order to fulfil their tasks. However, the report 
on  the  assessment  of  recent  alleged  money  laundering  cases  involving  EU  credit 
institutions  already  showed  that  many  supervisors  were  critically  understaffed.  EBA’s 
report  on  money  laundering  and  terrorist  financing  risks  affecting  the  EU’s  financial 
sector has also highlighted this deficiency83. 

This  report  maintains  the  recommendation  that  Member  States  further  intensify  their 
efforts in this area and demonstrate that AML/CFT supervisors can fully carry out their 
tasks. 

82  In  September  2020  the  European  Commission  adopted  a  report  assessing  whether  Member  States  have  duly 
identified  and  made  subject  to  the  obligations  of  Directive  (EU)  2015/849  all  trusts  and  similar  legal  arrangements 
governed under their laws: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52020DC0560  
83 Consult pp. 19-20 of the Opinion. 

19 

 
                                                 
(4) 

Increased on-site inspections by supervisors 

The  2019  report  maintained  the  2017  recommendation  to  Member  States  to  conduct  a 
sufficient  number  of  on-site  inspections  with  regard  to  both  the  financial  and  the  non-
financial sector. 

Marked  differences  continue  to  exist  among  Member  States;  several  indicated  in  their 
national  risk  assessments  that  they  conduct  regular  thematic  supervisory  inspections, 
while others reported that they carry out a general risk assessment. 

With  regard  to  the  financial  sector,  FIUs,  supervisors  and  other  AML/CFT  competent 
authorities  should  continue  to  conduct  on-site  inspections  that  are  commensurate,  in 
terms  of  frequency  and  intensity,  to  the  identified  ML/TF  risks.  These  must  focus  on 
specific operational ML/TF risks, depending on the specific vulnerabilities inherent to a 
product or service. In particular:  

  The  EBA’s  Opinion  on  ML/TF  risks  shows  that  credit  institutions  receive  the  most 
coverage in terms of supervisory activities. This report also considers it necessary for 
competent  authorities  to  monitor  closely  the  management  of  ML/TF  risk  by  credit 
institutions and if necessary, strengthen their supervisory efforts  with  more intrusive 
supervision of those firms that present the most significant ML/TF risks.  

  Controls in the sector of payment institutions, which present significant inherent risks, 
are  still  rated  as  poor  or  very  poor84.  This  report,  in  line  with  the  EBA’s  Opinion, 
recommends enhanced on-site supervision of the sector. 

  As regards e-money institutions, full-scope on-site inspections may not be necessary 
in  every  case.  Instead,  for  instance,  on-site  thematic  reviews  to  ensure  adequate 
supervisory coverage of a sufficiently large number of firms are recommended. 

  Investment firms are also a sector for which several authorities indicated they did not 
carry out any off-site/on-site inspections in the period under review. Thus, it should be 
considered  whether  to  increase  the  proportion  of  inspections  carried  out  on-site  in 
light of the identified risks. 

For the non-financial sector, this report calls on Member States to ensure that their FIUs, 
supervisors  (where  they  exist)  and  other  AML/CFT  competent  authorities  conduct 
sufficient  unannounced  spot-checks  especially  on  high-value  dealers,  real-estate 
professionals and antique traders. 

(5) 

FIUs, supervisors and other AML/CFT competent authorities to 
carry out thematic inspections 

Previous  reports  recommended  that  supervisors  develop  a  better  understanding  of  the 
ML/TF risks to which a specific segment of the business is exposed to. The information 
received  by  the  Commission  shows  this  has  happened  only  to  a  point.  It  is  also  worth 
mentioning that in certain sectors (e.g.: art and antiques) no specific supervisors exist. 

In the currency exchange area (bureaux de change), competent authorities are advised to 
give due consideration to thematic inspections to develop a broad understanding of risks 
and the quality of risk mitigation efforts in the sector. 

84 As stated by EBA’s Opinion under section 4.2.2, “Quality of controls”. 

20 

 
                                                 
This report maintains the recommendation that Member States further ensure that FIUs, 
supervisors  (where  they  exist)  and  other  AML/CFT  competent  authorities  carry  out 
thematic inspections.  

(6) 

A wider list of obliged entities 

The 5th Anti-Money Laundering Directive extended the scope of the AML/CFT regime 
to: fiat-to-crypto companies and custodian wallet service providers; art traders (when the 
value  of  transactions  or  series  of  linked  transactions  amount  to  EUR  10  000  or  more); 
those who provide similar services to auditors, external accountants and tax advisors as a 
principal business or professional activity; and estate agents who act as intermediaries in 
the letting of property where the monthly rent is equivalent to EUR 10 000 or more. A 
review of the national  risk assessments  and transpositions carried out  by  most Member 
States shows that this mitigating measure has generally been followed. 

This  report  maintains  the  recommendation  to  pay  close  attention  to  professionals 
particularly at risk: estate agents, art and antiques dealers and specific traders in high-
value  goods  if  they  accept  cash  payments  above  a  certain  threshold;  virtual  currency 
exchange platforms and wallet providers. 

(7) 

An  appropriate  level  of  customer  due  diligence  for  occasional 
transactions 

In  the  proposal  for  an  AML/CFT  Regulation,  the  Commission  proposes  that  obliged 
entities should not be required to apply due diligence measures on customers carrying out 
occasional  or  linked  transactions  below  a  certain  value,  unless  there  is  suspicion  of 
money  laundering  or  terrorist  financing.  Whereas  the  EUR  10  000  threshold  applies  to 
most  occasional  transactions,  obliged  entities  which  operate  in  sectors  or  carry  out 
transactions that present a higher risk of money laundering and terrorist financing should 
be required to apply customer due diligence for transactions with lower thresholds. 

Thus, this report maintains the 2019 recommendation to Member States to set out criteria 
that ensure that the customer due diligence rules applicable to business relationships are 
not circumvented. 

(8) 

Appropriate level of customer due diligence for safe custody and 
similar services 

In  light  of  the  rising  trend  detected  as  regards  the  use  of  these  services  by  criminal 
organisations  to  hide  the  proceeds  of  crime,  this  report  maintains  the  recommendation 
that  Member  States  ensure  an  appropriate  level  of  customer  due  diligence  for  safe 
custody and similar services. 

(9) 

Regular  cooperation  between  competent  authorities  and  obliged 
entities 

Previous reports recommended enhanced cooperation between competent authorities and 
obliged entities in order to simplify the detection of suspicious transactions, increase the 
number  and  the  quality  of  the  suspicious  transactions  reports,  and  provide  guidance  on 
risks,  customer  due  diligence,  and  reporting  requirements.  Several  sectors  continue  to 
stress  the  lack  of  feedback  on  their  suspicious  transactions  reports  as  a  problem,  in 
particular:  gambling,  tax  advisors,  auditors,  external  accountants,  notaries  and  other 
independent legal professionals and money or value transfer services. 

21 

 
This report recommends a close and ongoing cooperation among AML/CFT competent 
authorities,  FIUs,  law  enforcement  authorities,  and  the  private  sector.  Public-Private-
Partnerships  (PPPs)  have  been  established  in  some  Member  States  to  enhance 
cooperation and information exchange and to contribute to the improvement of reporting 
of suspicious transactions. Some PPPs also include the sharing of tactical information to 
support  on-going  investigations  by  law  enforcement  authorities.  Through  information 
sharing,  obliged  entities  can  further  adjust  their  monitoring  systems  to  reflect  new 
typologies and risks. 

(10)  Special and ongoing training for obliged entities 

Most  Member  States  indicate  that  training  has  been  provided  as  recommended,  and 
guidance on AML/CFT obligations has been issued for different sectors. 

This  report maintains  the recommendation to  provide  further training, especially with 
regard  to  obliged  entities  particularly  at  risk,  as  identified  in  this  supranational  risk 
assessment. 

(11)  Annual  reporting  from  competent  authorities/self-regulatory 
bodies  on  the  AML/CFT  activities  of  the  obliged  entities  under 
their responsibilities 

National  risk  assessments  indicate  that  supervisory  activity  by  self-regulatory  bodies  is 
still  a  recent  activity,  with  divergent  levels  of  compliance  and,  consequently,  a  lack  of 
detailed  statistics.  The  Commission’s  proposal  for  an  AML/CFT  Regulation  introduces 
provisions to  facilitate obliged entities’ compliance with  their reporting obligations and 
allow for a more effective functioning of the FIUs’ analytical activities and cooperation. 
Compared  with  the  5th  Anti-money  Laundering  Directive,  it  increases  consistency  by 
ensuring  that  when  supervision  is  performed  by  self-regulatory  bodies,  those  self-
regulatory bodies are subject to oversight by a public authority. 

This  report  maintains  the  previous  recommendation  and  encourages  self-regulatory 
bodies to take on a more proactive role in AML/CFT supervision. 

4.4.  Risk analysis by product/service — specific recommendations 

In  addition  to  the  above  recommendations85,  there  is  a  need  for  the  following 
product/sector-specific action86:  

4.4.1.  Cash and cash-like assets  

  In their national risk assessments, Member States should take into account risks posed 
by  high-value  cash  payments  and  cash-intensive  businesses,  and  take  appropriate 
mitigating measures.  

4.4.2.  Financial sector  

  It  is  essential  that  Member  States  develop  and  improve  their  beneficial  ownership 

registers to assist in carrying out robust customer due diligence checks. 

85 Some recommendations are reiterated here in the context of specific sectors. 
86 For more details on the recommendations by product/service, see the accompanying Staff Working Document. 

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  Member  States  should  improve  the  monitoring  and  detection  systems  applicable  to 

products which are more exposed to TF risks.  

  Member States should continue to conduct thematic inspections, focusing on different 
areas depending on the sector/product.  For on-site inspections in relevant companies 
in  a  particular  sector,  it  is  more  efficient  to  select  areas  of  risk  than  to  conduct  an 
overall inspection; this gives supervisors a clear picture of best practices and the most 
significant shortcomings. 

  Provision  of  training  and  guidance  on  risk  factors  such  as  non-face-to-face  business 
relationships or transactions, offshore professional intermediaries and customers, and 
complex or shell structures. 

4.4.3.  Non-financial  sector  and  products  —  Designated  non-financial 

businesses and professions  

  Member  States  should  ensure  that  competent  authorities/self-regulatory  bodies 
provide training and guidance on risk factors, with a specific focus on non-face to-face 
intermediaries  and  customers  or 
business  relationships,  offshore  professional 
jurisdictions, and complex or shell structures. 

  Member  States  should  ensure  that  self-regulatory  bodies/competent  authorities 
conduct  thematic  inspections  on  compliance  with  beneficial  owner  identification 
requirements. 

  Competent  authorities/self-regulatory  bodies  should  provide  Member  States  with 
annual reports on measures undertaken to assess the obliged entities’ compliance with 
their  customer  due  diligence  obligations,  including  beneficial  owner  requirements, 
suspicious transaction reports and internal controls.  

  Member States should ensure that service providers offering advice to undertakings on 
capital  structure,  industrial  strategy  and  related  matters,  and  advice  and  services 
relating  to  mergers  and  the  purchase  of  undertakings,  comply  with  their  beneficial 
owner obligations.  

4.4.4.  Gambling sector  

  Competent  authorities  should  put  in  place  programmes  to  raise  awareness  among 
online  gambling  operators  of  the  emerging  risk  factors  that  may  affect  the 
vulnerability  of  the  sector,  including  the  use  of  anonymous  e-money  and  virtual 
currencies  and  the  emergence  of  unauthorised  online  gambling  operators.  Feedback 
from  FIUs  on  the  quality  of  the  suspicious  transaction  reports  would  improve  the 
reporting and the use made of the information provided.  

  In  addition  to  training  sessions,  Member  States  should  ensure  adequate  training 
focusing  on  appropriate  risk  assessments  of  relevant  products/business  models  for 
staff, compliance officers and retailers. 

4.4.5.  Collection and transfers of funds through a non-profit organisation  

  Member  States  should  ensure  that  non-profit  organisations  are  more  involved  in 
national  risk  assessments,  especially  as  regards  the  possibility  of  de-risking  by 
financial institutions. 

  Member States should develop information and awareness-raising programmes on the 
risk of abuse of non-profit organisations and provide awareness-raising materials for 
them.  

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4.4.6.  Professional  football,  free  ports,  investor  citizenship  and  residence 

schemes  

  Professional  football  –  Member  States  should  consider  which  actors  should  be 
covered  by  the  obligation  to  report  suspicious  transactions  and  what  requirements 
should apply to the control and registration of the origin of the account holders and the 
beneficiaries of funds.  

  Free  ports  –  Member  States  should  implement  independent,  regular  anti-money 
laundering  audits  of  agreed  free  ports  operators’  compliance  functions  and  ensure 
adequate  and  consistent  enforcement  of  the  anti-money  laundering  procedures  and 
oversight already enshrined in law.  

  Investor citizenship  and investor residence schemes – Member States  should  abolish 
investor  citizenship  schemes  and  thoroughly  assess  ML/TF  risks  in  their  investor 
residence schemes. 

5.  CONCLUSIONS 

The Commission will continue to monitor the implementation of the recommendations of 
this supranational risk assessment and report again, in principle by 2024, in light of the 
changes that may be introduced to the current EU regulatory framework. The review will 
also assess how EU and national measures affect risk levels. 

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