By Ella Rosenberg
It seems that the EU is facing a whirlwind, that for a change, is not Covid-19 related. 6 AMLD, the new Anti-Money Laundering Directive, which will take effect in December 2020, has begun to cause a great deal of concern to the firearms industry in the EU.
The new Directive entails hindrance in trade aspects when it comes to trading with firearms in the EU. A Directive, unlike a Regulation, means a minimum level of harmonization of the European market. By this, each Member State of the European Union (hereinafter- Member State) needs to transpose the directive into national law, while the same directive serves as the minimum level of standard and harmonization.
Although 6 AMLD serves the financial sector as a baseline for anti- money laundering rules, it is also applicable to other industries in the EU, such as firearms, drones, defence and AI.
6 AMLD serves as the minimum level of rules that should be applicable in all Member States in the EU for the prevention of money laundering and terrorist financing. At the same time it is applicable for receiving payments in crypto currencies. High risk industries, which are already under the radar of the EU Commission as high risk industries, should take into account that receiving crypto payments is possible only in compliance with the new regulatory framework of 6 AMLD.
What does 6 AMLD entail for the firearms industry in the EU?
6 AMLD serves for the first time in EU history the notion of personal criminal liability in case of alleged money laundering and counter terrorist financing. This may seem elementary when it comes to receiving payments, but this was not the case until recently. Up until now the liability was upon the Member States in their own national laws, now they have received a direct implementation for transposition by the EU Institutions.
This means that firearms dealers and brokers (as defined in the new firearms regulatory framework) are personally and criminally liable for each transaction which is not in conformity with the Directive.
Furthermore, Member States are obliged to impose sanctions and blacklist companies, dealers and brokers which are not compliant with 6 AMLD. Burden of proof lies upon the private sector, hence the risk of exposure of liability and blacklisting has increased.
Member States will be able to cease operations of certain companies which pop up in indication as non-compliant to the Directive in much more ease, while the same companies will not be able to apply for grants, subsidies and will be under intense scrutiny when trying to operate financially in the EU, such as opening bank accounts.
The scope of the Directive is also quite extensive, as it covers all EU Member States, EU citizens, third country citizens operating in the EU and operating with financial institutions in the EU.
Firearms dealers, manufactures and brokers whom are already operating in the EU, or planning to operate in the Union, should bear in mind that non-compliance to the Directive will lead to criminal liability, foreclosure of enterprises, blacklisting, and difficulty operating with financial institutions in the EU.
Ella Rosenberg, an EU Law Regulatory Consultant, is CEO of the Israel-EU Chamber of Commerce and Industry.