MLD4: Here At Last: What Does It Mean?

After many years of negotiation, the fourth Money Laundering Directive (MLD4) and the accompanying revised Funds Transfer Regulation (FTR2) were adopted in May 2015 and made it into the Official Journal of the EU a month later. MLD4 must be implemented in all Member States and in force by 26 June 2017, the same date as FTR2 takes effect. In this article, Emma Radmore looks at the history and drivers behind MLD4, its key provisions and what this means for firms in the UK regulated sector.

History of EU money laundering legislation

The EU made the first Directive – MLD1 – in 1991. This was aimed predominantly at drugs-related offences and introduced obligations on credit and financial institutions to verify the identity of their customers and report concerns of money laundering. This Directive remained the key EU measure for some 10 years. The UK already had in place, and as a result of MLD1 updated, its legislation and industry guidance.