Anti-Money Laundering Compliance| The EU Anti-Money Laundering (AML) package

I. Background & Overview

With the EU-AMLR (so-called "Single Rulebook"; EU Regulation 2024/1624) adopted on 31 May 2024, uniform EU-wide regulations regarding beneficial ownership and corresponding obligations will apply for the first time in all 27 EU Member States from 10 July 2027 (Art. 90 para. 2 half-sentence 1 EU-AMLR).

The EU-AMLR is a core component of the EU Commission's “Action Plan for a Comprehensive EU policy on Preventing Money Laundering and Terrorist Financing” launched in 2020 and was adopted as part of the "EU Anti-Money Laundering (AML) Package".

This package also includes the 6th EU Anti-Money Laundering Directive (EU Directive 2024/1640), which was also adopted on 31 May 2024, and the EU AMLA Regulation (EU Regulation 2024/1620). The latter established for the first time a supranational EU authority responsible for combating money laundering and the financing of terrorism (Authority for Anti-Money Laundering and Countering the Financing of Terrorism, AMLA), based in Frankfurt am Main.

The directly applicable EU-AMLR will replace the corresponding provisions of national anti-money laundering laws within its scope of application. This applies especially to the regulations currently set out in Sec. 3 and Sec. 18 et seq. of the German Anti-Money Laundering Act (Geldwäschegesetz; GwG) regarding the identification of beneficial owners and their notification to the German transparency register. The new provisions of the EU-AMLR do not only include a standardization, but also a comprehensive expansion of the notification obligations to the member state transparency registers (Art. 63 et seq. in conjunction with Art. 51 et seq. EU-AMLR).

II. Key elements of the new regulation

In order to ensure that companies comply with their AML compliance obligations and to exclude personal liability risks for the respective members of the management responsible for this task, the following key elements of the EU-AMLR concerning the identification and notification of beneficial owners must be observed:

• The expansion of the scope of companies subject to notification obligations (see Part 2 of the series of articles);
• The new and EU-wide unified system for the determination of (actual) beneficial owners (see Part 3 of the series of articles);
• The extension of the scope of persons to be notified as "fictitious beneficial owners" (see Part 3 of the series of articles);
• The extension of the information to be reported on beneficial owners (see Part 4 of the series of articles);
• The extension of documentation obligations as well as new requirements for proof and additional declarations to be submitted (see Part 4 of the series of articles).

III. Consequences of the new regulation

As a result of the new regulations, from 10 July 2027, every company based in Germany will generally have to re-identify its beneficial owners and “immediately” notify them accordingly to the transparency register. The very limited exceptions provided for listed companies are likely to prove irrelevant in practice in most cases.

The aforementioned key elements will also have to be observed when preparing and submitting notifications of change to the transparency register. In future, these must be made immediately and in any case no later than 28 calendar days after the relevant change has occurred (Art. 63 para. 2 subpara. 1 sent. 2; Art. 64 para. 2 subpara. 1 sent. 2 EU-AMLR).

The requirement for notifications of change will have to be reviewed on an ongoing basis, at least once a year. Such review can take place as part of a separate procedure or as part of other regular procedures (e.g. submission of the annual financial statements) (Art. 63 para. 2 subpara. 1 sent. 3, sent. 4; Art. 64 para. 2 subpara. 2 EU-AMLR).

Companies based outside the European Union are also affected by the new regulations. In addition to the area of public procurement, the connecting factor for the expansion of the scope of companies subject to notification obligations is primarily the area of real estate acquisitions, which is traditionally abused in order to conceal illegally obtained assets.

The management or compliance officers of companies subject to transparency requirements will also have to comply with extended documentation obligations. For each notification of beneficial owners to the transparency register, additional information respectively documents required to verify the underlying shareholding and control structure must be filed with the register-keeping agency. The extent of the proof to be kept and submitted will depend on the individual case. The same applies to additional declarations to be made to the register-keeping agency. In case of the notification of so-called "fictitious beneficial owners" increased requirements will have to be observed.

IV. Recommendation & Outlook

The new provisions of the EU-AMLR will pose new challenges for the compliance management both of solely nationally operating companies as well as cross-border organized groups.

If there is a presence in several EU Member States, the focus for the latter will also have to be on avoiding contradictory notifications to the member state transparency registers in case the shareholding and control structures of the respective group companies are identical or at least comparable. This is especially relevant against the background of the ongoing EU-wide interconnection of national transparency registers (Beneficial ownership registers interconnection system (BORIS)).

In this context, management and compliance officers should not only make the necessary preparations to comply with the new provisions of the EU-AMLR at an early stage, but also keep an eye on the implementation of the other parts of the EU anti-money laundering (AML) package, particularly those relevant to sanctions and procedural legislative aspects.

This applies in particular to the provisions of the 6th EU Anti-Money Laundering Directive (“6. EU-AMLD”), which the Member States must implement into national law by 10 July 2027.

The new directive contains provisions concerning the establishment of and access to the transparency registers, which remain a national responsibility (Art. 10 et seq. 6. EU-AMLD), as well as the framework of an "effective, proportionate and dissuasive" sanction mechanism to be considered by the EU Member States (Art. 53 para. 2 6. EU-AMLD in conjunction with Art. 68 EU-AMLR). Violations of notification obligations shall in future not only be punishable with familiar instruments such as the imposition of fines and "naming & shaming" sanctions (Art. 55, 56 para. 2 lit. c) 6. EU-AMLD) but also with new types of administrative measures such as orders to change the management structure (Art. 56 para. 2 lit. g) 6. EU-AMLD).

The supervisory competence regarding the new anti-money laundering legislation, including the competence to enforce the new sanction mechanism, is to remain primarily with the respective national authorities of the EU Member States (Art. 53 para. 1 - 9 6. EU-AMLD). Exceptions exist in view of the special responsibilities of the AMLA as EU authority to combat money laundering and terrorist financing, newly established on the basis of the EU AMLA Regulation as a supranational AML watchdog.

It remains to be seen in practice whether the new, comprehensive regulatory framework for the area of transparency register law can actually ensure the intended full transparency regarding the shareholding and control relationships of companies based respectively operating in the European Union.

The key issue to be resolved is how in practice the interpretation respectively implementation of the new provisions will be accordingly handled in the individual case. At least the possibility of a reliable “autonomous compliance management” by small and medium-sized enterprises (SMEs) appears in view of the extent of the new regulations doubtful, requiring the observance of three main legislative acts at EU level alone, supplemented by the upcoming required changes to the national money laundering laws of the 27 EU Member States.

Authors: Jens Hoffmann | Anna-Lena Kringel | Natalia Vost

Published: March 2025