Key Changes To Monitor In The New EU AML/CFT Framework

“Fighting money laundering and terrorist financing contributes to global security, integrity of the financial system, financial stability, and sustainable growth.”

–European Commission

In response to a series of high-profile scandals and rising money laundering threats, the European Union updated its anti-money laundering and counter-terrorist financing framework to enhance transparency, address regulatory loopholes, and strengthen the overall resilience of the financial system against illicit financial flows.

In 2021, the European Commission presented a package on anti-money laundering (AML) and counter-terrorism financing (CFT), including Regulation (EU) 2024/1624, which was enacted on May 31, 2024. This legislation will take effect on July 10, 2029, and will replace the previous EU AML directives.

The package responds to calls from the European Parliament and the EU Council for more resilient, coherent anti-money laundering and counter-terrorism rules that are in line with technology improvements, rising crimes, and international standards.

This project was jointly overseen by Parliament’s Committees on Economic and Monetary Affairs, Civil Liberties, Justice, and Home Affairs.

On 20 July 2021, the European Commission presented the legislative proposal for establishing an AML authority, the sixth AML directive, revision of the funds transfer regulation, and prevention of ML/TF activities through the EU’s financial system.  

The European Union also released an updated AML package, focusing on expanding AML obligations on crypto-asset service providers (CASPs) and luxury goods traders, along with establishing a single AML/CFT rulebook.

Let’s now review key changes in these regulations, assess the implications of this updated EU AML/CFT framework, and examine how these revised measures strengthen the package coherence while aligning with the growing AML technological reforms in the European Union.

What is AML Governance Framework?

The AML governance framework is essential to an effective anti-money laundering strategy, as it aligns with the new EU AML/CFT rules and promotes a risk-based approach to countering money laundering.

Defining AML duties and responsibilities is critical to detecting money launderers and terrorist financiers. An efficient governance structure promotes quick suspicious activity reporting by top management, boosting early identification.

The EU’s updated AML package emphasizes the necessity of strong AML measures in ensuring regulatory quality and compliance effectiveness.

Key Legislative Measures of the Latest EU AML Framework

The purpose behind the updation of the EU’s AML package was to enhance the support and cooperation between the Financial Intelligence Units (FIUs) while streamlining the international dimensions of the EU’s AML laws.

The breakdown of the critical legislative pieces under the updated AML measures is given below:

• Establishment of Authority for Anti-Money Laundering and Countering the Financing of Terrorism(AMLA)
• Introduction of an Updated AML/CFT Directive
• Updated EU AML/CFT Rulebook
• EU Transfer of Funds Amendment

Establishment of Anti-Money Laundering Authority

The new AML package emphasizes the establishment of a supranational regulatory supervisor, classified as the Anti-Money Laundering Authority (AMLA).

This particular provision, aimed at mitigating money laundering, will come into effect by the end of 2025. EU’s financial institutions, particularly those dealing with high-risk entities, will come under the AMLA’s direct supervision.

AMLA, in line with the FATF guidelines, expands the traceability criteria to the transfer of virtual assets while covering the activities of the crowdfunding service providers.  

Introduction of an Updated AML/CFT Directive

Taking into consideration the updated AML/CFT framework, the revised 6th AML directive repeals the previous ones.

Under this updated directive, the member states are required to formulate a national body that oversees the domestic self-regulatory bodies to mitigate money laundering instances.

The new 6AMLD specifies the legal basis for using personal data to combat financial crimes, including money laundering and terrorism financing.

As per the updated AML (EU) 2024/1624 directive, the EU member states are required to conduct National Risk Assessments (NRAs) at least every four years, with the results made accessible to obliged entities. Additional changes include enhanced BO registers analysis and strengthened whistleblower protections to better detect and prevent money laundering.

Updated EU AML/CFT Rulebook

The AMLA and AMLAR provide a uniform EU rulebook to ensure consistent implementation of current directives and prevent regulatory divergence.

The guideline covers mortgage and credit intermediaries, fund managers, crowdfunding platforms, and investment migration operators.

It also describes the criteria for PEPs and third-country transactions. Companies must build monitoring systems, take a risk-based approach to outsourcing, and establish AML/CFT training programs.

It prevents transaction anonymity and establishes cash transaction limitations of more than €10,000.

EU Transfer of Funds Amendment

The new Transfer of Funds Regulation (TFR), which is part of the AML/CFT package, requires Legal Entity Identifiers (LEIs) for wire transfers and crypto-asset transactions.

Crypto-asset service providers (CASPs) must determine and retain originator and beneficiary information, and deliver it to authorities upon request. Non-crypto remitters and CASPs should include LEIs whenever possible.

Firms must establish extra controls, technology, monitoring, and reporting in order to comply with these rules. To save money, the EU strives to establish consistent standards among member states.

What are the Implications of the Updated EU AML CFT Framework?

Some of the most critical provisions of the updated EU AML package are said to come into effect in July 2027. The aim of this package is to strengthen the European Union’s fight against the prevailing financial crimes.

As the global AML measures transition from 2024 to 2025, the EU’s financial institutions are required to adopt transformative policies to stay ahead of money laundering and terrorist financing crimes.

Some of the critical implications of the updated EU AML/CFT regulations are briefly examined below:

• The AML strategy of the updated package is to expand the anti-money laundering obligations to cover the circumstances of the traders of luxury goods and precious metals to combat money laundering instances.
• While the €10,000 threshold remains the same as in previous regulations, it now applies to both cash and non-cash transactions. Traders dealing in such items exceeding this threshold are required to report suspicious activities to the Financial Intelligence Units.
• Under the updated AML CFT standard, EU regulators are identifying digital assets as a separate asset class. The use of anonymous payment accounts and banks is strictly prohibited.
• Moreover, CASPs are required to identify and counter the money laundering risks associated with self-hosted addresses.
• The EU’s updated AML compliance protocols enhance the region’s registry disclosure programs. Under this surveillance, the registry information of ultimate beneficial owners must be disclosed to journalists, activists, and compliance officers, aiding in the examination of who truly owns a business operation while ensuring accurate detection of suspicious accounts.

Scope of the Updated EU AML CFT Rulebook

Previously, the EU’s anti-money laundering framework has taken the form of directives. With the updated AML/CFT framework, the implementation of a single regulatory rulebook ensures uniformity across the member states.

Here’s an overview of how the renewed AML package expanded the regulatory scope of obliged entities:

• The updated AML rulebook broadens the list of entities that are required to ensure compliance with the EU’s AML laws, including CASPs, crowdfunding platforms, consumer and mortgage credit intermediaries, and high-value goods traders.
• The latest provisions of the 6th AML directive mandate the risk assessment modules for residence-by-investment schemes to mitigate money laundering attempts.
• The new regulatory rulebook emphasizes that all employees ensure comprehensive employee background checks while justifying the AML outsourcing decisions to mitigate risky activities.
• In  July 2026, a standardized EU-wide regulatory reporting format is to be observed to enhance the suspicious activity reporting measures.
• By October 2025, enhanced regulatory technical standards are to be developed in accordance with the European Banking Authority’s Consultation. These regulatory standards mandate extensive coverage of information sharing, parent entity identification, and compliance obligations for multinational groups.
• The updated AML rulebook harmonizes the beneficial ownership identification through stronger disclosure rules. Under the 6th MLD, beneficial ownership transparency requires the member state authorities to have unrestricted access to the data registers to streamline the detection of money launderers and illicit activity financiers.
• Under the updated laws, the CASPs are now obligated to prevent the activities of anonymous crypto accounts.
• Furthermore, the CASPs must ensure the integration of enhanced due diligence measures while performing transactions with self-hosted crypto wallets to minimize the intensity of unauthorized financial challenges.

Essential Regulatory Trends Stemming from the EU Updated AML Regulatory Framework

In 2025, the major AML regulatory trends are expected to be associated with the EU’s updated AML package. Here are the key regulatory developments stemming from the updated package:

• The enhanced AML regulations are expected to make waves within non-financial institutions, including real estate, luxury goods, and cross-border crypto transactions, due to the package’s exclusive regulatory coverage.
• In line with the updated EU AML package, central registries, cross-border collaboration, and standardized AML regulations are on the horizon.
• The revised AML framework aims to stimulate the accuracy of beneficial ownership data assessment through entrusted third-party data sources.

Regulatory Tips to Comply with AML CFT Measures

All the institutions functioning under the EU’s latest AML package should adopt a proactive approach to comply with the updated regulatory measures of the new AML package.

In response to these changes, some of the regulatory tips firms must prioritize are:

• The automation of certain data management and screening measures stimulates the overall risk management processes, boosting the detection of money launderers by extracting the required information from an array of EU databases.
• The documentation of the internal processes conducted during the information gathering and assessment stage, both at the EU and national levels, is essential to identify the illicit activities that may lead to long-term financial discrepancies.
• Companies are required to optimize their sanction screening measures to intensify the authentic identification of the entities breaching the EU’s AML and sanctions guidelines.

Stay a Step Ahead of the Regulatory Changes with AML Watcher’s Expert Solutions

As the updated AML package shapes the regulatory framework of the European Union, institutions must abide by clear regulatory measures to stay compliant with the evolving guidelines.

Since these rules will partially be applicable from July 2027, businesses located in the member states will have to acquire AML services from trusted service providers.

AML Watcher’s data-driven screening and risk assessment approach provides enhanced guidance to the involved entities during this transitioning phase. Wondering how it could be done?

Through the following services:

Data-Driven Transaction Monitoring

AML Watcher ensures the detection of unusual transaction patterns through its real-time screening approach.

With our augmented intelligence solutions, businesses can utilize behavioral transaction monitoring to recognize irregularities, aiding the detection of potential money laundering operations.

Automated Adverse Media Monitoring

Throughout the customer’s business lifecycle, institutions must integrate automated adverse media monitoring modules to identify risky entities through comprehensive sentiment analysis.

Cut through the noise and extract structured adverse media insights through AML Watcher’s adverse media monitoring modules.

Comprehensive Crypto Wallet Screening

Screen sanctioned or unauthorized crypto wallet addresses against global lists with AML Watcher. Our real-time solutions help businesses across the European Union to stay updated with the changing crypto risk profiles.