The EU AML 4th Directive establishes a transnational framework aimed at harmonizing anti-money laundering measures and enhancing the assessment of financial institutions' risks. Key components include the focus on beneficial ownership, the emphasis on ongoing customer due diligence, and the integration of various risk factors in compliance measures. Financial institutions must regularly evaluate their risks and ensure that their customer due diligence processes are both effective and adequate in addressing the inherent risks associated with their clients.

1. European Focus:
Meeting the Demands of the
Fourth Directive
Andre JACQUEMET
ACAMS Board Member - France Chapter
Lecturer in law,
BPA consul<ng partner
@GlobalBPA
www.globalBPA.com

2. The EU AML 4th direc0ve:
a transna0onal Framework
• 2 documents released on the 20th of May 2015
• DIRECTIVE (EU) 2015/849 (AML)
• REGULATION (EU) 2015/847 (On informa<on accompanying transfers of funds) – FATF Rec 6
• EU AML 4D, on a risk-based approach
• Technical adjustment regarding FATF 40 Rec. 2012
• Implementa<on harmonisa<on across member states, BUT possible differen<a<on
according to member states AML-TF risk assessment outcomes
• S<ll, a poli<cally correct response to corrup<on
• Major breakthrough: beneficial ownership
• Reinforcement of Whistleblowing capability and whistleblower protec<on
[AML4D Art 61]

3. The EU AML 4th direc0ve:
a transna0onal Framework
• FI to bridge the gaps between local, na<onal and transna<onal requirements
• FI to remain responsible to demonstrate their good faith when assessing their
risks and doing business: Inten<onality of facts can be deducted from objec<ve
circumstances [AML4D Art 3-6]
• FI may lose their licence to operate in case of AML issues [AML4D Art. 59-1.(c)]

4. From risk assessment to due
diligence: criteria’s and risk factors
• Indica<ve risk factors to be considered in order to qualify the inherent risk if a
given situa<on [AML4D Annexes I II]
• (1) Customer risk factors (PEPs, Beneficial owner, etc.)
• (2) Product, service, transac<on or delivery channel risk factors
• (3) Geographical risk factors
• My sugges<on is to analyse any situa<on with 5 axes, to add:
• (4) Industry sector
• (5) Financial flow setup
• Indica<ve criteria's to be used in order to choose the appropriate vigilance level
regarding a given customer
• (i) the purpose of an account or rela<onship;
• (ii) the level of assets to be deposited by a customer or the size of transac<ons undertaken;
• (iii) the regularity or dura<on of the business rela<onship.
• To keep in mind that you are ul<mately responsible to correctly assess the risk
[AML4D Art.11 and 13]

5. From risk assessment to due
diligence: what is a customer?
• Customer Due Diligence can be outsourced [AML4D Art.26-29 ] to eligible third
par<es [AML4D Art. 3 (2) ] subject to equivalent EU AML rules [AML4D Art. 28]
Intermediary
Customer
Beneficial
Owner
Beneficiary
Customer
Representa<ve

6. The EU AML 4th direc0ve:
Customer Due Diligence (CDD)
Prerequisite:
• AML risk assessment [Art 8-1],
• ProporSonate procedures and internal
controls [Art 8-3],
• IntegraSon of FATF and MONEYVAL
country assessments [Art 9],
• DefiniSon of «unusual paZerns of
transacSons» [Art 18-3]
• The right Sming: « business
relaSonship » noSon [Art 3-13 , Art 14-1
and 14-2 ]
• A case-by-case approach [Art 18-2]
• Domains to be addressed by the Due
Diligence, according to the situaSon
inherent risk:
• On-going monitoring of the business
relaSonship including scruSny of
transacSons [Art 13d]
• To be able to prove the CDD
effecSveness and adequacy [Art13-4]

7. The EU AML 4th direc0ve:
Customer Due Diligence (CDD)
Business relaSonship
Establishment
Business relaSonship
On-going
CDD Any customer:
• IdenSficaSon: Customer [Art 13a], Beneficial
owner [Art13b], Terrorist/Frozen [Art 13-3]
• IdenSty verificaSon [Art13a]
• Purpose and intended nature of the business
relaSonship [Art 13c, Art 18-2]
• Knowledge of the customer [Art 13d]
Any customer:
• On event, update customer related data
[Art13d] and Iden<fiy the customer or its
representa<ve [Art13]
• On a recurring basis, sample customer
files [Art13d]
• Search on open sources (*)
• At any Sme, assess operaSon
consistency [Art13d]
Enhanced CDD i.e. PEP [Art 20]:
• CDD +
• Risk management system [Art 20 a)]
• Senior Management approval [Art 20b]
i.e. High risk jurisdic<ons [Art 18-1]
i.e. Correspondant banking [Art 19]
i.e. PEP [Art 20]:
• Automated procedure
• Commercial Database
• Search for AML/Corrup<on funds origin
• FI must be in a posi<on to demonstrate the adequacy of their CDD to the real
risk they are facing [AML4D Art. 13-4]

8. Key Takeaways
• The European AML 4th direc<ve is a transna<onal
framework, FI may have to deal with na<onal
differences
• financial ins<tu<ons must assess their risks on a
regular basis and act consistently
• Customer Due Diligence is an on-going process to
be completed in a <mely manner.

9. Andre JACQUEMET
ACAMS Board Member - France Chapter
Lecturer in law, BPA consul<ng partner
TwiZer: @GlobalBPA
Linkedin: hmps://fr.linkedin.com/in/jacquemet
Mail: andre.jacquemet@globalBPA.com
Meet the lecturer