Andre JACQUEMET's contribution to ACAMS members regarding the 4th AML directive. Web seminar held 2016, March 18th

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