Preparing for the EU’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Legislation: A Guide for Accountants, Auditors, and Tax Advisors

In May 2024, the European Union (EU) introduced new reforms to combat money laundering and terrorist financing (AML/CFT). These changes will affect accountants, auditors, and tax advisors, who are now required to adopt stronger compliance measures. With the legislation set to take full effect in 2027, it’s essential to start preparing now.

Key Aspects of the EU AML/CFT Reform Package

The EU’s new AML/CFT reforms include several legislative acts:

1. AML Regulation (AMLR) – Prevention of money laundering and terrorist financing.
2. 6th AML Directive (AMLD6) – Member States’ obligations to prevent money laundering.
3. AMLA Regulation – Establishment of the European Anti-Money Laundering Authority (AMLA).

These reforms impose new responsibilities for professionals, such as customer due diligence (CDD), beneficial ownership transparency, and suspicious activity reporting.

Obliged Entities: Who Needs to Comply?

The EU's AML/CFT regulations apply to a broad range of "obliged entities," including financial institutions like banks and insurers, as well as non-financial professionals such as accountants, auditors, tax advisors, lawyers, and real estate agents. These professionals are required to implement policies, procedures, and controls designed to identify and mitigate risks related to money laundering and terrorist financing. 

They should begin reviewing their current policies and adjusting them to meet the new standards.

Key Areas for Accountants to Focus On

1. Mapping Compliance Gaps: Accountants and tax advisors should start by identifying any compliance gaps relative to the new AML/CFT requirements. This process involves reviewing existing policies and procedures and aligning them with the new regulations. By conducting a thorough audit of compliance efforts, firms can ensure they are on track to meet the updated standards.

2. Strengthening Governance Structures: The AML reforms will place increased accountability on senior management, including the introduction of mandatory roles such as AML compliance manager and compliance officer. Accountants will need to strengthen their governance models to comply with these changes, especially when managing larger teams or networks. A review of firm-wide governance structures will help identify necessary adjustments and ensure accountability across the organization.

3. Reinforcing the Compliance Culture: The new regulations will demand more than just paperwork. A strong compliance culture, focused on professional judgment and proactive risk identification, is essential. For smaller firms, this may require the adoption of new processes or technology solutions to ensure compliance without overwhelming existing resources.

4. Strengthening Customer Due Diligence (CDD): Collecting client information is no longer enough; accountants must implement strong processes to evaluate and verify the information they collect. This is especially important with the revised definition of Ultimate Beneficial Owners (UBOs). The AMLR lowers the threshold for beneficial ownership to 25% or more, and for high-risk entities, this threshold may drop to 15%. Therefore, accurately categorizing corporate entities and identifying UBOs is critical.

5. Prioritizing Data Security: With the increased obligations to collect and store sensitive client data, ensuring robust data protection is crucial. Accountants must ensure that they have secure data-sharing protocols in place and that any third-party data providers they rely on meet the necessary compliance standards.

6. Educating Clients: It’s important for accountants to start educating clients early about the changes to AML regulations and how they will affect their business. Proactively informing clients can help avoid compliance delays when the regulations come into full force.

7. Using AMLA Guidelines: The European Anti-Money Laundering Authority (AMLA) will provide updated guidelines starting in 2026. These will be essential for aligning practices with the new regulatory framework. Accountants should stay informed and be ready to adapt their procedures in line with AMLA’s recommendations.

Role of Professional Bodies

Professional bodies must assist firms, especially smaller practices, by offering training, compliance resources, and guidance. They should also promote an understanding of the principles behind the regulations to foster a deeper compliance culture.

Conclusion

With the EU’s new AML/CFT regulations coming into full force by 2027, it’s crucial for accountants, auditors, and tax advisors to start preparing now. Reviewing compliance procedures, strengthening governance frameworks, and fostering a compliance culture will help firms meet the new obligations. Collaboration with professional bodies and staying updated on new guidelines from the European Anti-Money Laundering Authority (AMLA) will be key to a smooth transition.