From July 2027, new, largely harmonised rules to combat money laundering and terrorist financing will apply across the EU. For regulated businesses, the EU Anti-Money Laundering Regulation introduces new or more specific requirements. What is changing – and what should businesses be preparing for now?
Money laundering does not stop at national borders. However, within the European Union, the regulations designed to combat it have, until now, been largely shaped by national laws. That is set to change: the new EU anti-money laundering package will comprehensively reform and further harmonise the European legal framework.
A key component is the EU Anti-Money Laundering Regulation (AMLR). It will apply directly in the Member States of the European Union from 10 July 2027. Unlike a directive, it does not first need to be transposed into national law.
At the same time, the new European Anti-Money Laundering Authority (AMLA) will play a central role in standardising supervision and putting the new regulatory framework into practice.
For businesses, this means that although the new requirements will not apply until 2027, affected organisations should begin their preparations well in advance.
What changes will the EU Anti-Money Laundering Regulation bring?
The main aim of the reform is to ensure a more uniform approach within the EU. In future, companies subject to these requirements are to operate more closely in accordance with the same rules – particularly with regard to risk assessments, customer due diligence, beneficial owners and the handling of suspicious cases.
For companies operating internationally, greater harmonisation could bring long-term benefits. At the same time, existing processes must be reviewed to ensure they comply with the new European requirements.
An overview of the key changes
More consistent customer verification
The thorough vetting of customers and business partners – known as customer due diligence (CDD) – remains a key component of anti-money laundering measures.
Obliged entities must, amongst other things, verify the identity of their customers and, where necessary, determine which beneficial owners are behind a company or a transaction. The new regulation harmonises these requirements more closely within the EU.
For certain occasional transactions, it generally provides for a threshold of 10,000 euros, above which due diligence obligations apply. Irrespective of thresholds, such checks may be required, particularly where there is a suspicion of money laundering or terrorist financing.
EU-wide cash payment limit
One particularly tangible change is the cap on cash payments. In future, a maximum of 10,000 euros may generally be paid in cash for goods or services. Member States may, however, set lower national limits.
The aim of the cap is to prevent large cash payments from being used to conceal the origin of illegally acquired funds.
More standardised handling of suspicious cases
Reports of suspicious activity are also to be standardised more closely across Europe. AMLA is working on common standards and formats for reporting suspicious activities and transactions.
For businesses, this means that internal reporting channels and responsibilities should be clearly defined. However, the step before that is crucial – staff must be able to recognise suspicious incidents in the first place and know how to respond correctly.
AMLA: New supervisory body for the prevention of money laundering
The reform will bring about changes not only to the regulatory framework but also to European supervision.
The new AMLA, based in Frankfurt am Main, is intended to promote a more uniform application of anti-money laundering regulations within the EU. To this end, it is developing common standards, coordinating national supervisory authorities and is currently setting out various requirements of the new regulatory framework in more detail.
From 2028, the AMLA is also set to directly supervise selected, particularly high-risk, cross-border financial sector firms.
For internationally active companies, anti-money laundering is thus increasingly becoming a European compliance issue
What businesses should be doing now
Even though the new regulations will not come into force until July 2027, affected companies should start preparing in good time. This includes, in particular:
checking which new requirements apply to their own business,
updating existing money laundering risk assessments,
reviewing processes for customer identification and for identifying beneficial owners,
aligning internal control and reporting processes with the new framework,
monitoring further standards and guidelines issued by the AMLA,
raise staff awareness of money laundering risks and suspicious circumstances.
The last point is particularly important: a compliance system can only function if employees recognise unusual transactions and know what to do in the event of a suspicion.
Preventing money laundering starts with being vigilant
The new EU rules create a more consistent framework for the prevention of money laundering. In day-to-day operations, however, it is often staff who are the first to notice suspicious payments, unusual business transactions or other warning signs.
In addition to adapting processes and controls, companies should therefore also keep a close eye on their staff’s knowledge. Regular training can help them recognise typical money laundering methods and suspicious circumstances, and respond appropriately in the event of an emergency.
Those who address the new requirements at an early stage can align their processes, responsibilities and training programmes with the new European framework in good time.