5th Money Laundering Directive set to expose global businesses’ due diligence measures

LexisNexis® Risk Solutions, the global analytics provider, is today urging companies to review their due diligence processes ahead of the implementation of the 5th Money Laundering Directive (5MLD), which comes into force on the 10th January 2020. 5MLD, the EU’s latest attempt to strengthen its defences against money laundering, includes new requirements to standardise the enhanced due diligence (EDD) controls currently implemented by organisations.

Currently, due diligence processes across companies are inconsistent. Under the new rules, it will be mandatory for all organisations subject to money laundering regulations to apply a minimum set of EDD for business relationships, and potentially transactions, that involve high risk countries. As such, businesses will be required to obtain additional information on: the customer and beneficial owner(s); the intended nature of the business relationship; the source of funds and wealth of the customer and the reason for the intended or performed transactions.

To help firms get to grips with the forthcoming change, LexisNexis Risk Solutions has today released a new enhanced due diligence guide which showcases how businesses can overcome challenges associated with conducting EDD checks and offers practical tips to improve their due diligence processes.

Michael Harris, director, financial crime compliance and reputational risk at LexisNexis® Risk Solutions says:

“As it stands, different organisations take different approaches when conducting enhanced due diligence, which is problematic when it comes to managing risks across the board. The most sophisticated financial criminals will know where the weak spots lie and use this to their advantage. By levelling out the playing field across the EU, and enforcing minimum standards, it’s hoped that defences will be stronger, and risky transactions less likely to slip through the cracks.

If organisations have due diligence measures in place, they shouldn’t automatically assume that they will be compliant with new rules. It is vital that businesses take the time to review their current processes, policies and controls as if they don’t, they risk non-compliance. Whilst there are no silver bullet solutions when it comes to EDD, our guide can point firms in the right direction and help them to meet obligations efficiently.”