The Impact of the 6th Anti-Money Laundering Directive

Up until June 2021, Malta’s position apropos anti-money laundering was the implementation of the
5th European Directive which was originally transposed to complement and reinforce the 4th European
Directive against money laundering. The 5th Directive has already been dubbed with the 6th anti-money
laundering Directive, which came into effect on the 3rd of December 2020, and was in turn
implemented into national law by the various Member States by the 3rd of June 2021.

The 6AMLD focuses on a risk-based approach agenda which should,
primarily, be given strict interpretation and ought to be undergone by all financial institutions. The
Directive aims at helping said financial institutions fight the offences of money laundering by featuring
amendments which vary from criminal law provisionsto definitions which have stringently highlighted
the nature of the crimes.

The following are some of the major key points of 6AMLD: –

Further harmonization

The 6AMLD stipulates the different definitions of money laundering, with the aim of removing
loopholes and lacunas in Member States’ domestic legislation. A harmonized list of 22 predicate
offences which symbolise money laundering and which must be criminalised by the Member States
implementing this Directive, has also been equipped. This list includes:

1. Participating in an organized crime group or racketeering
2. Terrorism
3. Human trafficking and migrant smuggling
4. Sexual exploitation
5. Illicit trafficking in narcotic drugs and psychotropic substances
6. Illicit arms trafficking
7. Illicit trafficking in stolen and other goods
8. Corruption
9. Fraud
10. Counterfeiting currency
11. Counterfeiting and pirating products
12. Murder
13. Kidnapping and hostage-taking
14. Robbery or theft
15. Smuggling
16. Tax crimes relating to direct and indirect taxes
17. Extortion
18. Forgery
19. Piracy
20. Insider trading and market manipulation
21. Environmental crime
22. Cybercrime

Expanding the regulatory framework

The terms “aiding and abetting, inciting and attempting” have also been added to this Directive. Their
inclusion indicates that anyone who, in some way or another, assists, supports, incites this offence,
and attempts to launder money, is nonetheless liable of being an accomplice to such an offence and
faces the same penalties as those who profit from money laundering activities.

Extending criminal liability

The 5AMLD, caters for individuals’ punishments only, whereas the 6AMLD introduced further liability,
allowing for legal persons, such as companies or partnerships, to be held criminally and legally liable
for the crime of money laundering. Legal representatives acting on behalf of a legal person, may also
be held criminally liable.
6AMLD has also introduced the notion of dual criminality, wherein the requirement of having the
offence be unlawful in both jurisdictions ie. The country in which the offence takes place and the
jurisdiction in which the crime of money laundering is committed, is vital.

Enhanced measures

A maximum term of imprisonment of at least four years, has been introduced as a punitive measure
for natural persons culpable with money laundering. In addition, non-criminal monetary fines,
penalties such as the temporary prohibition from public welfare benefits or a ban from conducting
business, may also be sanctioned vis-à-vis natural persons. On the other hand, the punitive measures
for legal persons include exclusion from entitlement to public benefits or aid, temporary or
permanent; exclusion from access to public funding; disqualification from commercial activities;
closure of establishments which have been used for committing the offence, and possibly, judicial
winding-up.

Member State’s co-operation

Following the dual criminality requirement, the demand for co-operation between Member States has
increased tremendously, specifically since this synergy will greatly benefit judgements, in that they
are issued in a more coherent manner, and, the centralisation of legal proceedings.

Conclusion

The enactments of the Directive strive to alter the corporate sector, and hence, its parallel CSPs,
companies and institutions have taken up the hint to increase and improve their risk management
policies, internal checks, and due diligence checks for clientele at a corporate governance level prior
to banks, to mention a few. Financial institutions should also adapt to reporting any crimes to the
relevant authorities, where necessary, or else, risk facing sanctions. In this manner, any fraudulent
business is halted at the doorstep with no possibility of furthering its filthy roots internally or at
domestic level.

Zeta Corporate & Management Services Limited is a Class C Corporate Services Provider authorised
and regulated by the Malta Financial Services Authority (the “MFSA”) in terms of the Company
Service Providers Act (Cap. 529 of the Laws of Malta, as amended by Act L of 2020).

For more information on how Zeta can assist you please contact our Business Development team on
bd@zeta-financial.com.