NEWS

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 The Anti-Money Laundering and Countering the Financing of Terrorism Authority (AMLA) will be the central authority coordinating national authorities to ensure the correct and consistent application of EU rules. 

In the financial sector, the Authority will directly supervise those financial sector entities exposed to the highest risk of money laundering and terrorism financing.

AMLA will also support financial intelligence units (FIUs) to improve their analytical capacity around illicit flows and make financial intelligence a key source for law enforcement agencies. 

The Authority will facilitate cooperation between FIUs, including by establishing standards for reporting and information exchange, supporting joint operational analyses, and by hosting the central online system, FIU.net.

  The European Parliament is expected to vote on its final approval in the plenary session of 22-25 April 2024. Once adopted, the Regulation establishing the AMLA will apply from July 2025. Before then, the Commission is responsible for establishing the AMLA and for its initial operations. 

AMLA will be a decentralized EU regulatory agency and its seat will be located in Frankfurt and begin operations in 2025.

 It said AMLA will be comprised of more than 400 staff members. 

This Commission proposal for creating of AMLA was part of the AML legislative package presented in July 2021.

   The EU Parliament and EU Council reached a landmark agreement on the ‘single AML rulebook’, this year. A regulatory proposal intended to strengthen and harmonize anti-money laundering (AML) and counter-financing of terrorism (CFT) regulations across EU member states.  

Key aspects of the new AML regulation include: 

• A European Union-wide limit on large cash payments, capped at 10,000 euros.
• Measures to ensure compliance with targeted financial sanctions and prevent circumvention of these sanctions.
• An exhaustive harmonization of rules throughout the EU to close potential loopholes used by criminals.
• Expansion of the list of entities obliged to conduct customer due diligence, including most of the crypto sector and traders of luxury goods, among others.

The agreement also recognizes the football sector as high-risk, expanding the list of obliged entities to include professional football clubs and agents. 

Businesses may expect the 2024 agreement to be formally adopted by late 2025, with rules coming into effect in early 2026.

 Some of the new rules have clearer implementation schedules: the expansion of AML rules to professional football clubs, for example, are slated to come into effect in 2029.  

On 5 February 2024, the Council and European Parliament reached a provisional agreement on a proposal for a regulation on Environmental, Social and Governance (ESG) rating activities, which aims to boost investor confidence in sustainable products.

The new rules aim to strengthen the reliability and comparability of ESG ratings by improving the transparency and integrity of the operations of ESG ratings providers and preventing potential conflicts of interests.

Under the new rules, ESG rating providers will need to be authorized and supervised by the European Securities and Markets Authority (ESMA) and comply with transparency requirements, in particular with regard to their methodology and sources of information.

On 2 February 2024, the Council of the EU published the text of the proposed:

• Directive amending MiFID II

• Amending Regulation (EU 600/2014) as regards enhancing data transparency, removing obstacles to the emergence of consolidated tapes, optimizing the trading obligations and prohibiting receiving payment for order flow.

The European Parliament adopted the proposed documents on January 16th, 2024. 

The new provisions are intended to reduce information asymmetries between market participants and improve orderly trading in commodity derivatives concerning energy and food. To protect investors from suboptimal trading decisions, the practice of receiving payments for forwarding client orders for execution (‘payment for order flows’) will be banned across the EU.

ESMA published two Consultations Papers on guidelines under Markets in Crypto Assets Regulation (MiCA), one on reverse solicitation and one on the classification of crypto-assets as financial instruments. ESMA invites comments from stakeholders by 29 April 2024. 

Reverse Solicitation  

The proposed guidance confirms ESMA'S previous message that the provision of crypto-asset services by a third-country firm is limited under MiCA to cases where the client is the exclusive initiator of the service. This exemption should be understood as very narrowly framed and must be regarded as the exception. A firm cannot use it to bypass MiCA.

Classification of crypto-assets as financial instruments.  This initiative, which follow on from previous work by ESMA is aimed at bridging the MiCA regulation and the Markets in Financial Instruments Directive II (MiFID II) and ensuring consistency across the EU. 

The proposed guidelines aim at providing NCAs and market participants with structured but flexible conditions and criteria to determine whether a crypto-asset can be classified as a financial instrument. 

To do so, the draft strikes a balance between providing guidance and avoiding establishing a one-size-fits-all approach. Once finalised, these guidelines will provide much-needed clarity and contribute to the global standards in crypto-asset regulation. 

On 30 January 2024, the European Central Bank (ECB) announced that it was expanding its work on climate change.

In its new climate and nature plan 2024 – 2025 the ECB reaffirms its commitment to addressing the climate crisis within its mandate. It will continue to carry out and expand its ongoing climate-related actions and will explore three focus areas with a view to initiating new activities.

On 17 January 2024, the European Parliament and Council of the EU (Council) reached a provisional agreement on parts of the anti-money laundering (AML) package that aims to protect EU citizens and the EU’s financial system against money laundering (ML) and terrorist financing (TF). Under the new package, all rules applying to the private sector will be transferred to a new regulation, while a directive will deal with the organization of institutional AML and counter TF systems at the national level in member states. 

The provisional agreement expands the list of obliged entities to include new bodies. The new rules will engage most of the crypto sector through requiring all crypto-asset service providers (CASPs) to conduct due diligence on their customers