Address internal market barrier when updating EU AML Directive
​​BRUSSELS, 1 June 2016 – The 4th Anti-Money Laundering Directive (AMLD) poses in its current version a barrier to a harmonised digital single market in everyday banking, ESBG warns.

The savings and retail banking lobby argues that the barrier or obstacle should be tackled at the occasion of the pending revision of the fourth AMLD which is due to the Commission-issued Action Plan to strengthen the fight against terrorist financing as of February 2016.

Sticking point: non-face-to-face business relationships or transactions

Adopted in May last year, the 4th AMLD contains under Article 18 a regulation that leaves the Member States with a certain flexibility in view of assessing risks through an enhanced customer due diligence. Depending on how those risks are weighted by each Member State, these enhanced due diligence obligations can create a de facto barrier to cross-border sales.

EU policymakers so far have missed out on tailor making anti-money laundering rules to fit within the ever-increasing digital era. According to Article 18, applied to when assessing the risks of money laundering and terrorist financing, EU member states and obliged entities shall take into account at least the factors of potentially higher-risk situations set out in Annex III. This annex contains a non-exhaustive list of various factors and evidence which are of potentially higher risk. ESBG is at issue with the classification of “non-face-to-face business relationships or transactions” as a high risk factor in this annex. As banking digitization further flourishes, this requirement would be a unwelcome obstacle for boosting cross-border sales of retail financial services which the Commission has committed itself to. Those services would be severely hampered when, at the same time, enhanced due diligence are necessary in cases of non-face-to-face business relationships.

An additional issue is that Member States are interpreting the wording “non-face-to-face business relationships” differently.  Some Member States interpret this requirement in a strict way, for instance Austria, where law stipulates residence requirements as an enhanced obligation. In Germany and others, identification via video-camera is permitted as equivalent to face-to-face identification, according to a March 2014 newsletter from the German Federal Financial Supervisory Authority. This varying interpretation of legal texts among EU member states, leading to gold-plating in some cases, creates a particular obstacle to the Digital Single Market and prevents boosting cross-border sales.

Why it’s important

The re-opening of the 4th AMLD provides a unique opportunity to address the non-face-to face issue within a relatively short time to help unleash the Digital Single Market.

The European Parliament thinks it important as well. The EU representative legislative body published recently a draft report on the Commission Green Paper on Retail Financial Services, acknowledging ESBG’s position on AML, especially trading obstacles identified around the 4th AMLD and e-identification. 

The parliament urges in its draft report that the Commission and the EU member states, “…by working carefully on the implementation of the eIDAS Regulation and the new anti-money laundering legislation, inter alia, to create – as should be entirely feasible – a general environment in which robust security requirements are combined with fair and simple procedures for consumers to identify themselves…”​


Digitalisation; Innovation; European Institutions; Anti-Money Laundering and Counter Terrorist Financing