Fourth EU Money Laundering Directive (4MLD / AMLD4)

The Fourth EU Money Laundering Directive (4MLD / AMLD4) is an EU directive that establishes the legal framework for the prevention of money laundering and the financing of terrorism in the European Union (EU).

4MLD was introduced in June 2017 as an update to the existing legal framework
4MLD strengthens customer due diligence requirements, including identifying and verifying the identity of beneficial owners of corporate customers
4MLD increases transparency in the ownership of companies and trusts
4MLD improves cooperation between national authorities and creates a centralised EU-wide database of beneficial ownership information
4MLD strengthens the responsibilities of financial institutions, to identify and prevent money laundering and terrorism financing.

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4MLD / AMLD4 is an EU directive aimed at combating money laundering and the financing of terrorism. Introduced in June 2017, it builds upon the previous Third Anti-Money Laundering Directive (3MLD) and establishes a more comprehensive and consistent framework for the prevention of these illegal activities across the EU.

One of the key changes introduced by 4MLD is the requirement for financial institutions to identify and verify the identity of the beneficial owners (UBO) of corporate customers. This means that financial institutions must take reasonable measures to understand the ownership and control structure of their corporate customers and ensure that they are not involved in illegal activities.

By updating and strengthening the legal framework for the prevention of money laundering and the financing of terrorism (CFT), AMLD4 aims to enhance the EU's efforts to combat these illegal activities and maintain the integrity of the financial system.

How can financial institutions uncover the ownership and group structure of their customers?

As part of the Customer Due Diligence (CDD) process, businesses are required to provide information relating to company ownership and group structure, including the identity of beneficial owners and other related parties. Financial institutions will often use publicly available information such as company registration databases (e.g. Companies House), news articles and financial reports. Some financial institutions are automating many of these checks through subscriptions to services such as FullCircl, which enable them to access everything they need to assess company ownership and group structures through one single source.