Trump Administration Executive Order (EO) Tracker
Insights and Analysis
Transforming Industries: How the EU's anti-money laundering regulation affects the non-financial sector
11 April 2025
The new EU Anti-Money Laundering Regulation (EU) 2024/1624 (the “AML Regulation”) introduces significant changes to the regulation of non-financial sectors. By including new obliged entities, the EU demonstrates its determined fight against money laundering. Despite the compliance challenges, the harmonization of anti-money laundering efforts across the EU promises a more effective and uniform system to combat money laundering and terrorist financing. Through proactive preparation and the implementation of necessary measures, obliged entities can ensure they meet their compliance obligations and support the EU in this crucial fight.
The AML Regulation is the heart of the European Union's anti-money laundering package aimed at combating money laundering and terrorist financing. This comprehensive package, adopted by the Council and European Parliament in May 2024, seeks to strengthen the EU's framework by harmonizing rules and enhancing supervision across member states. The AML Regulation will apply directly to all obliged entities in all member states from July 10, 2027, with an exception for football agents and professional football clubs, which will need to comply by July 10, 2029.
New Obliged Entities
While the initial European AML Directive only recognized credit and financial institutions as obliged entities, the scope has significantly widened over time. The AML Regulation further broadens the scope of AML requirements to include a wider array of obliged entities, as detailed in Article 3 of the AML Regulation. Notably, this includes crypto sector firms, crowdfunding service providers and intermediaries, mortgage and consumer credit intermediaries (other than credit institutions and financial institutions), investment migration operators, non-financial mixed activity holding companies, football agents, and professional football clubs.
Cash Payment Limit and Modification of the Definition of Traders in Goods
The Fourth Anti-Money Laundering Directive (MLD4), adopted in 2015, included traders in goods as obliged entities if they made or received cash payments above EUR 10,000. The current AML/CFT system relies on traders in goods to apply AML/CFT rules to transactions of EUR 10,000 or more. However, according to the Impact Assessment accompanying the Anti-Money Laundering Package (SWD(2021) 190 final), the effectiveness of these measures is limited. The volume of suspicious transactions reported by these sectors is generally low, and cash transactions are difficult to detect. Traders applying AML/CFT rules may face various challenges, such as losing clients to competitors with looser controls. Even when large cash transactions are reported, the lack of linked suspicions limits the production of significant financial intelligence.
As a result, the AML Regulation adopts a different approach towards traders consisting of two elements:
- introducing a Union-wide limit on cash payments above EUR 10,000, with the result that transactions above that threshold must be paid using other payment methods, such as bank transfers, credit cards, or other traceable methods; and
- limiting the application of AML/CFT obligations to traders, dealing in goods that are particularly exposed to money laundering and terrorist financing risks such as precious metals, precious stones, other high value goods and cultural goods.
For example, traders dealing in precious metals and stones are within scope due to the high value of the often small, transportable goods they deal with.
Motor vehicles, watercraft, and aircraft in the higher market segments are also deemed vulnerable to misuse for money laundering and terrorist financing due to their high value and transportability. Access to information on such goods, particularly when registered in third countries, might not be easily accessible to competent authorities. As a result, and to ensure visibility on the ownership of such goods, traders will be required to report transactions concerning the sale of high-value motor vehicles, watercraft, and aircraft.
Preparing for New Challenges
While some entities from the non-financial sector may soon no longer be subject to as many requirements under the new regulations, they should consider maintaining their AML risk management practices to avoid potential criminal liability for aiding money laundering. This continued vigilance can help safeguard their operations and reputation.
Newly obliged entities, on the other hand, must promptly implement appropriate systems and procedures to comply with the AML Regulation. This includes establishing robust risk management frameworks, conducting thorough customer due diligence (including in relation to their beneficial owners), and ensuring effective reporting mechanisms are in place.
Please contact us if you have any questions, or would like help navigating the complexities of the new regulatory landscape as part of the broader effort to combat money laundering and terrorist financing.
Authored by Richard Reimer, Sarah Wrage, Stefanie Franz.
Contacts
Frankfurt
Articles you may be interested in
Search
