The Holy Trinity of the Pandora Papers, 6 AMLD and AMLA

The publication of the Pandora Papers has not only set political and diplomatic realms ablaze, but it has, once again, highlighted a specific industry that is receiving far fetched scrutinized attention- fintech, and primarily the crypto sphere on centre stage.

The Papers themselves mention a significant amount of crypto exchange companies. This issue is not only troubling the crypto exchanges, which now have to deal with the long term consequences of being flagged under indication for money laundering and problematic structuring with direct relations to unregulated forex enterprises in the Caribbean.

Ella Rosenberg

The timing of the publication comes across the implementation of 6 AMLD (the Sixth Anti Money Laundering Directive) and the publication of the AMLA Regulatory Framework of the EU.

It seems that there is no direct correlation between the three main AML events of the year, be that as it may, as Ian Fleming once mentioned, once is considered a happenstance, twice coincidence and third time- enemy action.

Though the publication of the Pandora Papers is not enemy action, and cannot be deemed as such, the spiralling effect of the indication is what the Papers bring about.

AMLA, the new anti-money laundering regulatory framework of the EU, rekindles the flame of the EU Commission’s novel idea of a separate AML Authority, which will not be part of ESMA, an additional Regulation of AML (on top of 6 AMLD- which is dire enough to implement within each Member State) and revision of EU Directive 2015/847 of transfer of information between payment institutions towards a joint brink for financial services and capital markets union.

This ambitious, yet achievable, agenda of the EU not only affects the EU market as one market but the global fintech economy as a whole. Bearing that in mind, the Pandora Papers raise many questions about AML and CTF offences in the EU and the Caribbean. The companies that popped up in indication, have a significant issue with their banking solutions and payment methods.

Once a company is flagged under the publication of the Papers, the access that those companies have to their typical banking solution is hindered, due to the fact that the risk analysis of the financial institutions, which is conducted by the risk committee, compliance and regulatory departments, is now under extreme scrutiny to an extent that the bank would not like to extend the strain of their banking license, issued by the central bank in the same operating state.

When assessing their risk assessment of the financial institution, the issue of the risk appetite of the bank is at stake. Whether the bank would like to continue operating with the indicated financial institution is a matter of how avant-garde the risk appetite is, and how it is possible to manage the exact same risk.

The stake of the Pandora Papers is too early to be determined, be that as it may, the banks are now at the most critical point of the past year- the implementation of 6 AMLD into each Member State of the EU, the announcement of AMLA, and now the latest regulatory and risk drama. This leaves the banks at the pinnacle of risk assessment and management, meaning that their AML, risk and due diligence policies will have to be reassessed.


Ella Rosenberg is the Founder of Israeli-European consultancy.







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