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The Promising Impact of 5AMLD on Asset-Tracing Investigations

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In recent years, governments around the world have sought to make business ownership more transparent in order to combat financial crimes such as fraud and money laundering. While changes have been gradual, we must still commend the impact that increased transparency has already had on due diligence and investigations.

Two years after it first came into effect, the European Union’s 5th Anti-Money Laundering Directive (5AMLD) continues to drive change in the corporate investigations landscape. The legislation made several key amendments to its predecessors, and—most crucially for Neon’s intelligence gathering—it altered the processes surrounding ultimate beneficial owner (UBO) registers.

Thanks to 5AMLD, information regarding UBOs must now be accessible to the public. EU Member States must also work to strengthen their UBO verification mechanisms. As UBO transparency increases, we have found these public registers to be an invaluable data source in our investigations. The change has been gradual, though; Member States are still working to implement public access. Cyprus’ Register of UBOs, for instance, only became accessible to the general public on 1 June 2022. In other cases, there are still barriers preventing effective public access to information: in several countries, a tax ID is needed for access to their registers; and some use only local languages – e.g. in Bulgaria, information is all in Cyrillic script.

Nevertheless, our analysts have achieved excellent results using UBO databases to map and trace assets across multiple jurisdictions, identify offshore shell companies, and enhance estimations of companies’ and individuals’ net worth. In a recent investigation, we connected one individual to a complex network spanning eight jurisdictions and hundreds of millions of euros. This required a deep investigation into company records, shareholdings, and trust structures around the world.

As our analysts conduct investigations, leaving no stone unturned, UBO registers allow us to evidence suspicions and provide our clients with even greater surety in our actionable intelligence.

The United Nations Office on Drugs and Crime estimates that 2-5% of global GDP is laundered each year. That’s between $800 billion and $2 trillion annually. Public UBO information gives us access to critical information that can protect our clients while maintaining our dedication to intelligence with integrity, which is admissible in courtrooms and boardrooms.

Looking Ahead

In essence, 5AMLD underscores the value of open-source intelligence and the power of the internet in corporate investigations. With the 6th Anti-Money Laundering Directive already in effect, and the EU and UK looking to increase regulation of the cryptocurrency sector, it will be important to watch this space and observe how future regulatory developments strengthen our OSINT capabilities.

 

Article by Meher Malik

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