Greek Law 4734/2020: Transposition of the 5th AML Directive

The new Law 4734/2020 (Government Gazette A’ 196/08.10.2020) titled “Amendment of Law 4557/2018 (A’ 139) for the prevention of the use of the financial system for the purposes of money laundering or terrorism financing – Transposition of Directive (EU) 2018/843 (L 156) and art. 3 of Directive (EU) 2019/2177 (L 334) and further provisions” enhances the legal framework for the prevention and combating against the phenomenon of the use of the financial system for the purposes of money laundering or terrorist financing, by expanding the cooperation and exchange of information ability between the competent authorities, as well as the access to registries and other available information.

This law transposes into the Greek legislation the Directive (EU) 2018/843 (5th AML Directive) for the amendment of Directive (EU) 2015/849 (4th AML Directive), which was transposed to the Greek legislation by Law 4557/2018 (Prevention of the use of the financial system for money or terrorism financing).

Necessity and Purpose of the Regulation 

The nexus between organised crime and terrorism and the links between criminal and terrorist groups constitute an increasing security threat to the European Union. Preventing the use of the financial system for the purposes of money laundering or terrorism financing is an integral part of any strategy addressing that threat.

The Directive under transposition aims not only to detect and investigate money laundering, but also to prevent it from occurring. In order to keep pace with evolving trends in money laundering, terrorism financing and the collection of funds or property for terrorism purposes, further measures should be taken to ensure the increased transparency of financial transactions, of corporate and other legal entities, improvement of the cooperation between competent authorities, identification of criteria regarding transaction with high-risk third countries, limitation of anonymity and necessity of relevant supervision for providers engaged in exchange services between virtual currencies and fiat currencies as well as custodian virtual wallet providers.

Provisions of the New Law

The Law 4557/2018 constitutes the main legal instrument in the prevention of the use of the financial system for the purposes of money laundering and terrorism financing. The main amendments applied subject to the New Law are the following:

• Amendment of the definitions of beneficial owner and senior management official (AML Officer).

• Addition of definitions for electronic money, virtual currencies and custodian wallet providers.

• Amendment of the definitions for criminal activities, criminal organization, criminal offenses, as well as terrorism financing.

• Extension of Scope of Law 4557/2018:

• to any person that undertakes to provide, directly or by means of other persons to which that other person is related, material aid, assistance or advice on tax matters as principal business or professional activity

• to persons trading or acting as intermediaries in the trade of works of art when this is carried out by free ports

• to providers engaged in exchange services between virtual currencies and fiat currencies •to custodian virtual wallet providers.

• Hellenic Capital Market Commission is defined as the competent supervising authority for a) providers engaged in exchange services between virtual currencies and fiat currencies and b) custodian virtual wallet providers.

• Enhancement of the framework relating to individuals willing to report via safe manner suspicions of money laundering or terrorism financing by obliged entities. •Enhancement of the collaboration between the competent supervising authorities of the Member States.

• Competent supervising authorities: a) obligation for raising sufficient financial and technical resources for the compliance control of the supervised obliged entities and b) obligation for the establishment of special service units constituting of specialized personnel, exercising supervising duties.

• European Banking Authority is defined as the competent authority for any updates, in the context of the enhancement of its role against the European Supervising Authorities.

• Addition to the powers of the Central Coordinating Authority (Ministry of Finance): a) transmission to the European Commission of the list of the competent supervising authorities and their contact details, b) ensuring update of such data. •Description of the duties of the Strategy Committee, constituting the mechanism for the establishment in a national level of the strategy for the prevention of the use of financial system for money laundering or terrorist financing.

• Reduction in the limits and maximum amounts under which obliged entities are allowed not to apply certain customer due diligence measures relating to electronic money.

• Credit institutions and financial institutions acting as acquirers only accept payments carried out with anonymous prepaid cards issued by obliged entities seated in the European Union. •Identification and verification of the customer’s identity based on electronic identification means.

• Addition of article 16A to Law 4557/2018 for the application of enhanced customer due diligence measures:

• when dealing with cases involving third countries, characterized by the European Committee as high-risk for the use of financial system for money laundering or terrorist financing and

• when dealing with clients, who have business relationships or enter into transactions with third countries, characterized by the European Committee as high-risk for the use of financial system for money laundering or terrorist financing.

• The following are defined as third parties reliable for the execution of customer due diligence measures:

• those which have their seat in a Member State of the European Union •those which have their seat in a third country member of the Financial Action Task Force (FATF)

• those which have their seat in a third country, which has not been characterized or highlighted as a high-risk third country in a European Committee Act.

• Addition of article 21A to Law 4557/2018: establishment of a centralised automated data retrieval system (Bank Accounts and Payment Accounts Registry System) in order to get timely access to information on the identity of holders of bank and payment accounts and safe-deposit boxes, which are kept within the Greek territory.

•bMeasures for the protection of suspicious transaction reporting: ensuring legal protection for individuals, who report suspicions of money laundering or terrorist financing internally or to the Greek Financial Intelligence Unit (FIU), from being exposed to threats, retaliatory or hostile action and from adverse or discriminatory employment actions. •Establishment of the Greek FIU’s power to exchange confidential information, spontaneously or further to a relevant application of another FIU.

• Addition of article 34A to Law 4557/2018: collaboration between Greek and Member States’ AML/CFT competent authorities for the prevention of such limitation or imposing irrational and overly restrictive conditions during the exchange of confidential information.

Objectives

This Law aims to the improvement of the existing preventive regulatory framework, while at the same time seeks to the establishment of a regulatory environment, allowing companies to grow their businesses, without facing disproportionate compliance costs.

• Short-term objectives •Extension of the scope of Law 4557/2018 in order to include providers engaged in exchange services between virtual currencies and fiat currencies, as well as custodian virtual wallet providers.

• Limitation to the transactions’ anonymity via the reduction of the limits and maximum amounts of anonymous prepaid cards, under which obliged entities are allowed not to apply certain customer due diligence measures •Enhancement of the Greek FIU’s access to all the registries and information held by the obliged entities.

• Clarification of specific issues relating to the scope (obliged entities and exceptions) of the Central Register for Beneficial Owners

• Dealing with regulatory and technical issues arise during the function of the Central Register for Beneficial Owners

• Personal data protection •Issuance of a list indicating the specific functions which qualify as prominent public functions, for the purposes of identifying the politically exposed persons.

•Long-term objectives

• Increase of the transparency of financial transactions of corporate and other legal entities

• Enhancement of the information exchange between competent authorities at national and transnational level via the strengthening of the powers of the European Banking Authority in AML/CFT issues.

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