AMLR Articles 79–80

Welcome to our blog series on the EU AMLR. In the previous article, we reviewed data protection and record-keeping under the AMLR and why obliged entities must be able to manage personal data, documentation and authority requests in a legally robust manner.

In this article, we address Articles 79 and 80 of the AMLR. These provisions contain several important risk-mitigating measures to ensure compliance with the rules and reduce the risk of the financial system being used for money laundering and terrorist financing. They concern two areas that have long been regarded as particularly high-risk from an anti-money laundering perspective: anonymous instruments and large cash payments. Both can make it more difficult to trace assets, identify beneficial owners and establish who is behind a specific transaction.

For obliged entities, it is therefore important to have clear procedures for customer due diligence, information management and internal controls where transactions or customer structures give rise to suspicion. The rules also impose higher requirements for internal controls, risk assessments and monitoring of products and services that may be used anonymously. Many businesses may therefore need support from experienced AML specialists to ensure that their operations comply with the AMLR and are prepared for supervision.

Article 79 AMLR – Anonymous accounts

Article 79 contains several prohibitions and restrictions aimed at instruments that may be used to anonymise customers or transactions. The purpose of the provision is to prevent anonymity from being misused for criminal purposes.

The starting point is that credit institutions, financial institutions and crypto-asset service providers may not maintain, issue or provide certain types of anonymous products and services. The prohibition covers the following:

• Anonymous bank accounts.
• Anonymous payment accounts.
• Anonymous passbooks.
• Anonymous safe-deposit boxes.
• Anonymous crypto-asset accounts.
• Other accounts or arrangements that enable anonymisation or increased concealment of transactions.

The provision also covers the use of so-called anonymity-enhancing coins within the crypto sector. Anonymity-enhancing coins are defined in Article 2.25 AMLR. The term refers to crypto-assets with features designed to anonymise the traceability of information when crypto-assets are transferred, either as a standard function or as an optional feature.

Article 79 also requires existing owners and beneficiaries of anonymous bank accounts, payment accounts, passbooks, safe-deposit boxes and crypto accounts to be subject to customer due diligence measures before they are used. This means that obliged entities must identify owners and beneficiaries in existing customer relationships, even where the services could previously be used anonymously.

Article 79 also contains rules on anonymous prepaid cards issued in third countries. As a general rule, credit institutions and financial institutions acting as acquirers may not accept payments with such cards. The Commission may permit certain exemptions through technical standards where the risk is assessed as low. However, the general rule establishes that anonymous prepaid cards from third countries must not be accepted.

Another important part of Article 79 concerns bearer shares and warrants for bearer shares. Bearer shares mean that the person who physically holds the share certificate is also deemed to be the owner. Bearer shares make it possible for the beneficial owner to remain anonymous, which may be exploited for money laundering or terrorist financing.

Article 79.3 prohibits companies from issuing bearer shares. Existing bearer shares must also be converted into registered shares, immobilised or deposited with a financial institution by 10 July 2029 at the latest.

Where bearer shares have not been converted, immobilised or deposited by 10 July 2029, voting rights and dividend rights must be automatically suspended. The suspension applies until the bearer shares are converted, immobilised or deposited. If the shares have still not been addressed by 10 July 2030, they must be cancelled and the company’s share capital reduced by the corresponding amount. Warrants for bearer shares are also prohibited unless they are in intermediated form.

Companies whose securities are listed on a regulated market, or whose shares have been issued as intermediated securities through immobilisation or in dematerialised form, may however continue to issue new shares and retain existing bearer shares.

Article 80 AMLR – Large cash payments

Article 80 contains rules on large cash payments in exchange for goods or services. The provision means that persons trading in goods or providing services may not, as a general rule, receive or make cash payments exceeding EUR 10,000 or the equivalent amount in national or foreign currency. The threshold applies regardless of whether the payment is made in a single transaction or split into several linked payments. In practice, this means, for example, that it is not permitted to circumvent the rules by dividing a larger payment into several smaller parts.

Large cash payments may be used for money laundering and terrorist financing. Cash generally presents a higher risk from an AML perspective because it may be more difficult to trace than bank transfers, card payments or other electronic forms of payment.

Article 80 sets a common threshold of EUR 10,000, but Member States may introduce lower national thresholds. This requires the Member State to have consulted the European Central Bank. Where a Member State already has a lower threshold, that threshold may continue to apply.

There are certain exemptions from the EUR 10,000 threshold for large cash payments. The threshold does not apply in the following situations:

• Payments between private individuals not acting in a professional capacity.
• Payments or deposits made at credit institutions, electronic money issuers or payment service providers.

It is important to note, however, that payments or deposits as described above that exceed the threshold must be reported to the financial intelligence unit. This must be done within the time limits determined by the financial intelligence unit.

Article 80.5 requires Member States to introduce appropriate measures and sanctions against natural and legal persons acting in a professional capacity who are suspected of breaching the cash threshold. The sanctions must be proportionate to the seriousness of the breach, while also being sufficiently dissuasive to prevent repeated infringements.

Article 80 also allows Member States to temporarily suspend the application of the cash threshold where alternative means of payment are unavailable due to force majeure. Member States must notify the Commission of the situation without delay. The Commission may also require the Member State to terminate the exemption if it is not considered justified.

Requirements for internal procedures and controls

Articles 79 and 80 mean that obliged entities must work more systematically to identify risks linked to anonymity, cash and concealed ownership structures. It is particularly important to be able to demonstrate to supervisory authorities that the business has taken reasonable measures to reduce those risks.

At Morling Consulting, our AML lawyers and specialists in anti-money laundering legislation help companies identify risks, design risk-mitigating measures and update internal processes to comply with the provisions of the AMLR. We also support businesses in strengthening their AML work ahead of supervision and help obliged entities adapt customer due diligence, risk assessments, internal controls and reporting procedures to the new requirements concerning anonymous instruments and large cash payments.