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Jan 24, 2020

AML5: The new Anti-Money Laundering Directive

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AML5: The new Anti-Money Laundering Directive

What is AML5?

AML5 is the new community rule standard for the prevention of money laundering and terrorist financing. AML5 entered into force on July 9, 2018 at community level, with effective application at national level on January 10, 2020

This Directive dramatically changes this concept, creating a unique digital space for client identification in the financial sector.

Thanks to AML5, financial institutions have gained access to 508 million citizens to whom attend in the second international market, with 20 billion Euros of GDP.

If you want to know more about the new situation, download this whitepaper.

eID has the first solution that allows identification of customers by video in less than 30 seconds and meets the high level of security required in bank account opening processes.

AML5: Previous situation

So far, and although there are good cross-border practices such as FATF / FATF, legislation depends on national regulators, which need authorizations for non-face-to-face identification procedures in order to digitize customer identification processes.

Since Germany (BaFin as AML regulator) released the first authorization of a “non-face-to-face customer identification procedure”, Switzerland, Spain, Luxembourg, Portugal and Italy also did the same.

Video technology with artificial intelligence has been relied upon to achieve this level of legal and technical security equivalence as face-to-face identification.

Picture or selfie solutions are not compliant with regulations

American identity verification solution providers have been confusing compliance departments with their “selfie” solutions.

However, over time, the most prestigious analysts have managed to collect relevant information on international regulation and, in no case, for a KYC / CDD (Client Due Diligence) process a selfie image solution legally meets the requirements high-risk processes such as opening bank accounts, contracting life policies or pension plans, where end-to-end video streaming is mandatory.

Discover this article, in which selfie solutions are fully explained.

New AML5 Directive 

AML5 gives financial companies the possibility to provide services in a single digital market with 508 million consumers. It erases barriers to doing business in multiple industries and markets where there was a high fragmentation by regulation.

Europe is the second-largest market in the world, with 20 trillion dollars of GDP, ahead of the US and very close to the Chinese economy.

AML5 introduces in different sections the European regulation of trust services 920/2014, eIDAS, and delegates to it and to electronic trust services the ability to identify new customers.

eIDAS entered into force in July 2016 and has a technical background and specific stipulations on electronic identification solutions; a technical framework for validation solutions.

If you want to know about the deadlines and the actions to be taken for the effective application of the Directive as of January 10, 2020, visit this article.

eIDAS and its effect

With eIDAS, the European Commission creates the concept of “Digital Single Market”, homogenizing electronic identification solutions.

eIDAS proposes a regional identity document, which provides enormous efficiency in relations between states in all industries and, in particular, the movement and use of financial services in consumers.

AML5 Directive effectively introduces eIDAS regulation for the first time.

With regulations such as PSD2, AML5, eIDAS or GDPR, Europe is being a global pioneer in financial regulation, allowing businesses to take advantage of the opportunities that bring the disruption of the financial system.

eID, a reference partner to adopt AML5

Electronic IDentification accompanies financial institutions with disruptive and innovative solutions that reduce onboarding costs and improve processes. 

As a leading company in video identification solutions, eID works on all opportunities of the different AML regulations:

  • Our patented technology, VideoID, meets the requirements for the highest level of security: a qualified international laboratory has evaluated our Video IDentification solution with this level supported by artificial intelligence and machine learning.
  • Our AML5 Kit allows to adopt the norm in a simple way, helping businesses and their legal departments to perform the necessary tasks: risk analysis, qualification and adoption of the rule and the production execution focused on acquiring new clients in record time.

If you want to know more about this new scenario, click here to download this whitepaper.

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