Fashion Focus: Towards a Legal Framework for a Living Wage
Member states are also obliged to ensure that the provisions of the Fourth MLD are extended (under national law) to any professions or undertakings in addition to those outlined above, which are engaged in activities which make it particularly likely that they could be used for the purposes of money laundering.9 Member states must ensure that obliged entities “can be held liable for breaches” of the national law implementing the Fourth MLD, and any resulting sanction or measure must be “effective, proportionate and dissuasive”.10 The most relevant of the requirements imposed on the Commission, member states and obliged entities are set out below. 2.1 Risk Assessments Both the Commission11 (in the case of cross-border activities), and individual member states12 (in the case of individual states) are obliged to carry out risk assessments to identify risks of money laundering. In the case of the Commission, it must periodically publish reports of its findings,13 and in the case of individual member states it must designate an authority to coordinate the national response to the identified risks.14 Obliged entities meanwhile are required to carry out risk assessments to identify and assess their own money laundering risks.15 In so doing, they should take into account risk factors including those relating to particular countries or geographic areas. 2.2 Customer Due Diligence Obliged entities must apply customer due diligence measures in a broad range of circumstances. These include (i) when establishing a business relationship (meaning a business, professional or commercial relationship which is connected with the professional activities of an obliged entity and which is expected to have an element of duration); (ii) when carrying out a transaction that amounts to €15,000 or more; (iii) where there is a suspicion of money laundering; and (iv) where there are doubts about the veracity of any previously obtained customer identification data.16 The customer due diligence measures require the obliged entities to (i) identify the customer and their identity on the basis of information obtained from a reliable source; (ii) identify the beneficial owner and take reasonable measures to verify such person’s identity; (iii) assess and obtain information on the purpose and nature of the business relationship; and (iv) conduct ongoing monitoring of the business relationship, including scrutiny of transactions undertaken in the course of the relationship to ensure these are consistent with the entity’s knowledge of the customer, the business and the risk profile.17 In certain circumstances, an obliged entity may rely on a third party to meet these requirements, provided that such third party is an obliged entity, a member organisation or federal organisation of such obliged entity, or another institution in a member state or third country which applies customer due diligence requirements which are consistent with (and monitors compliance in a manner consistent with) the Fourth MLD.18 Obliged entities may not rely on third parties established in high-risk third countries (see section 3 below).19 If an obliged entity is unable to identify and verify the identity of a customer or its beneficial owner, then it must not establish a business relationship or carry out a transaction, and must terminate the business relationship. 20 There are certain circumstances in which obliged entities may carry out a simplified form of customer due diligence. This may apply where an obliged entity determines that this business relationship or transaction presents a “lower degree of risk”.21 Relevant factors may include geographical risk factors, with member states and third countries with effective anti-money laundering regimes being potentially lower risk.22 In contrast, obliged entities must apply “enhanced” due diligence measures when dealing with persons “in third countries identified by the Commission as high-risk third countries, as well as in other cases of higher risk” (see section 3 below).23 Particular risk factors include non-faceto-face business relationships, new products and new business practices, and geographical factors (such as countries identified as not having effective anti-money laundering systems, significant levels of corruption or which are subject to sanctions issued by the EU or the United Nations).24 The Commission has issued guidelines setting out particular risks factors to be considered, and the measures to be taken where enhanced due diligence measures apply. These measures include:25
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