- Member States had to transpose the fifth anti-money laundering directive by 10 January 2020 at the latest.
- It extends controls to virtual currencies, strengthens transparency on beneficial owners and watches prepaid cards more closely.
- In practice, banks, notaries and advisers will ask for more documentation when opening accounts, setting up companies or closing deals.
On 10 January 2020 the deadline expired for European Union member states to transpose Directive (EU) 2018/843, known as the fifth anti-money laundering directive. It amends the fourth directive of 2015, which already required banks, notaries, lawyers, tax advisers and estate agents to know their customers and to report suspicious transactions. Spain had not yet incorporated it into its legal system on that date.
The reform aims to close routes that had been opening up: payments with virtual currencies and anonymous prepaid cards, shell companies used to hide who controls them, and flows from countries with weak controls. For businesses and families it is not a distant matter: it means more questions and more paperwork every time an account is opened, a company is set up or a property is bought.
What the directive changes
The directive brings several novelties. Platforms that exchange virtual currencies for ordinary money and providers of wallet custody become obliged entities, just like banks. The threshold for prepaid cards that can be used without identifying the holder is lowered, centralised systems to find out who holds bank accounts are foreseen, and measures are tightened for clients linked to high-risk countries.
Transparency on beneficial owners is also reinforced, that is, the natural persons who ultimately own or control a company. Beneficial ownership registers of companies must be open to the general public, and those of arrangements such as trusts to anyone who can show a legitimate interest. The aim is that nobody can hide behind several layers of entities.
How it shows in practice
A directive does not bind individuals or companies directly until each country writes it into its own law, but the framework was already moving: those required to watch for abuse had been applying ever stricter criteria, and the European timetable set the direction. In Spain, beneficial ownership information is already collected by notaries and through the filing of annual accounts with the Commercial Registry.
Anyone opening an account, setting up a company or investing in an asset of some size should expect questions about the origin of the funds, the corporate structure and the ultimate owner. Firms that offer services involving virtual currencies, for their part, will have to prepare to meet obligations similar to those of any traditional financial institution.
What to review
It is worth checking that the information on the company’s beneficial owners is up to date and consistent across all documents: deeds, annual accounts, shareholder registers and bank contracts. A discrepancy, even an innocent one, can delay a transaction or trigger a formal request. The same goes for later changes: if a partner joins or leaves, or control of the company changes, the information should be updated without waiting for the next audit or the next procedure.
It is also useful to have to hand the documents that explain the origin of the assets or funds in an important transaction: contracts, deeds, tax assessments, statements. Preparing them in advance shortens timelines and avoids surprises. If your activity involves virtual currencies, ask your adviser which obligations will apply to you once the directive is incorporated into Spanish law.
Transparency is not an added burden but the condition for carrying on operating normally.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
