The European Union has introduced new Anti-Money Laundering Regulations (AMLR6) as part of its comprehensive AML Legislative Package. These regulations encompass various sectors, including the investment migration industry.
The AMLR6 will apply in July 2027, three years after its official entry into force (July 9, 2024). Member States will have two years to transpose some parts of the AML directive and three years for others.
The EU’s inclusion of “investment migration operators” as obliged entities under the new EU AML legislative package is not a sudden shift but rather the culmination of ongoing discussions and assessments at the EU level.
Under the new regulations, businesses “representing or offering intermediation services to third-country nationals seeking to obtain residence rights in a Member State in exchange for any kind of investment” will be subject to the same anti-money laundering and counter-terrorist financing (AML/CFT) requirements as other obliged entities, such as banks and financial institutions.
David Lesperance, a tax and immigration advisor who previously discussed this topic on IMI, explains that “these new regulations will obviously add another layer of complexity in dealing with clients as it adds the RCBI agent to the list of entities that will be looking at KYC and AML activities.”
He highlights that “the processing time already accounts for the sending/receiving financial institutions. The government doing these checks will extend those processing times even longer.”
Under AMLR6, investment migration operators must apply customer due diligence (CDD) measures when establishing a business relationship or carrying out occasional transactions above certain thresholds.
This process includes identifying and verifying the identity of their customers, the beneficial owners, and, where applicable, persons acting on behalf of customers. Under the new rules, the threshold for occasional transactions triggering CDD has been lowered from €15,000 to €10,000. The AML Authority (AMLA) can also establish lower thresholds for certain high-risk entities, sectors, or transactions.
If there are discrepancies between beneficial ownership information collected through CDD and the information available in member state beneficial ownership registers, investment migration operators must report this to authorities within 14 days, except for certain minor discrepancies. They must also have adequate policies, controls, and procedures to mitigate and manage ML/TF risks, including group-wide compliance programs.
Lesperance also addresses the financial implications for investment migration firms, explaining, “RCBI firms will now need to deal with this process. Whether to do in-house or use an outside contractor, it will be an additional cost they may pass onto the client.”
A message from our partners
He cautions that “undoubtedly there will be some dubious operators who will ignore these regulations and try to use these cost savings as a competitive advantage. How successful this high-risk pricing strategy will ultimately depend upon the robustness of enforcement.”
The AMLR aims to create a harmonized EU-wide AML/CFT measures framework. As stated in the regulation, this will ensure that “entities experience a more level playing field” across the EU. It also aims to make it more difficult for criminals to exploit differing national approaches or evade detection of illicit money flows.
The new regulations also grant enhanced powers to Financial Intelligence Units (FIUs) and AML/CFT supervisory authorities. FIUs will have the authority to suspend or withhold consent to transactions suspected of being related to money laundering or terrorist financing for up to 10 working days. They can also suspend using bank accounts, payment accounts, crypto-asset accounts, or business relationships for up to five working days.
The EU is establishing a new AML Authority (AMLA) to “ensure effective implementation and oversight.” AMLA will have direct supervisory powers over selected obliged entities in the financial sector and will coordinate and support the work of national supervisory authorities and FIUs.
As EU Commissioner for Financial Services, Mairead McGuinness expects AMLA to “be a game-changer in the fight against money laundering. It will be the center of our new supervisory system, as a supervisor in some cases and as a coordinator of supervisors in others, setting high standards across the EU.”
AMLA, the new EU-level AML authority, will be based in Frankfurt and is expected to start operations in mid-2025 before taking on its supervisory role in 2028.
Regarding legal liability, investment migration operators can face administrative penalties by AMLA or national supervisors for serious, repeated, or systematic breaches of key AML/CFT requirements. Maximum fines can reach 10% of total annual turnover or €10 million.
Failing to comply with CDD requirements, having inadequate group-wide policies and procedures, or reporting suspicious transactions are considered serious breaches. AMLA publishes penalties that investment migration practitioners can appeal.
However, Lesperance expresses skepticism about the effectiveness of these new regulations in combating money laundering. “Frankly speaking,” he asserts, “this will do nothing more to eliminate money laundering. Screenings are already being done by the financial institutions involved in the money transfer, and significant screening is being done by the country issuing the status. This is clearly a political effort to deal with a perceived problem that does not exist.”
Explore IMI’s Tools and Resources
Ahmad Abbas is Director of Content Services at Investment Migration Insider and an 8-year veteran of the investment migration industry.