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03.01.17

EU Regulators Propose Central Contact Points for AML/CTF Enforcement

Flag_of_EuropeEU banking regulators have unveiled a plan to standardize requirements for payments providers to establish contact points with authorities in various member states in which they operate. The initiative is aimed at improving enforcement of anti-money laundering (AML) and counter-terrorist financing (CTF) measures enacted by the Fourth Anti-Money Laundering Directive (4AMLD).

Under the proposal from the European Supervisory Authorities (ESA)—a collective of EU financial regulators—firms processing more than €3 million ($3.2 million) in annual payment volume will be required to appoint a liaison officer to act as a central contact point between the firm and a country’s relevant authorities. Several EU member states already mandate such a position, but there is no common approach or standards for doing so. Under the ESA proposal, the central contact point will be expected to facilitate the development and implementation of company policies that are in line with 4AMLD. The liaison also is responsible for reporting breaches of AML compliance at any of the company’s subsidiaries or branches to the firm’s head office and take corrective action.

“In the absence of a common European approach to [central contact points], there is a risk of regulatory arbitrage, which threatens to undermine the robustness of Europe’s AML/counter terrorist financing defenses,” the ESA said. “There is also a risk that legal uncertainty creates unreasonable obstacles for payment service providers and electronic money issuers wishing to provide their services on a cross-border basis.” The ESA is soliciting input on the proposal, with comments due by May 5, 2017.

Originally passed in 2015, 4AMLD initially was scheduled to take effect throughout the EU on Jan. 1, 2017, but EU member states successfully lobbied to push back that date and now have until June 26, 2017, to transpose the directive’s requirements into national laws.

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