EMIs are currently lost with endless correspondence with local EU Member State Financial Intelligence Units (hereinafter- FIUs). However, one should bear in mind that the turbulence that they are currently experiencing is not heading to a clearer horizon. Unless they comprehend and implement the new conditions of 6 AMLD, they will not be able to cleave to a brighter commercially viable horizon.
Many EMIs in the EU are currently experiencing enhanced enforcement due to the previous regulatory framework, which is 5 AMLD. The main difference between 5 AMLD and 6 AMLD, is that the notion of personal criminal liability is very dominant in 6 AMLD. This will take effect in December.
Because of this, EMIs will fall under even more enhanced regulatory enforcement by the FIUs. Thus, directors and owners of
EMIs will be personally liable for AML breaches, especially in the high-risk industry. Also, EMIs may be permanently shut down, will not be able to apply for grants or subsidies, and may even suffer from black-listing. Furthermore, the EMI license may be terminated indefinitely effective from the first notification sent by the local Member State Regulator.
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EMIs that are currently under inspection by their respective FIU should bear in mind that they should prepare themselves for the new conditions coming in December 2020. They should also prepare their respective compliance team for a more diligent and compliant work methodology, as from the coming December the criminal liability will shift.
EMIs in the EU should also bear in mind that working with industries that are considered high risk may entail enhanced enforcement by the Regulator. Since just as many cryptocurrency licenses are not been forced to comply with new conditions, it is quite feasible that EMIs, especially in the Baltics, will have to follow the lead of the cryptocurrency exchanges.
In that case, what should be deemed a suitable solution for the enhanced enforcement deadline of December? This is up to the EU Member States to transpose the Directive in a proper manner, bearing in mind that there is a minimum level of transposition. These Member States may decide upon this and have the full liberty and discretion to impose a higher level of enforcement. Be that as it may, the EMIs will have to shift their mindset, and consider acquiring more licenses in the EU. This comes in addition to full disclosure and creating a healthy regulatory relationship with the respective Member State Regulator and FIU.
Ella Rosenberg, Founder, Israeli- European Regulatory Consultancy Firm