The underlying objective of 4AMLD is to update and enhance the EU’s anti-money laundering (AML) and counter-terrorist Financing (CTF) laws. A new term “Obliged Entities” has been introduced which increases the types and numbers of firms who have to comply. The risk-based approach which underpins 4MLD has practical implications of how to take the right risk- based decisions. Some argue that the provisions of 4MLD are out of proportion in relation to the likely impact. However, when one considers the scale and nature of the harm caused by money laundering and terrorist financing what alternatives to 4MLD would be more effective? Governments are left with little choice but to impose stricter terms on entities which handle money. Overly prescriptive legislation in the field of risk would potentially stymie the ability to react to new financial crime methods and give the perpetrators increased ability to avoid detection. The core principles underpinning 4MLD are not new: they largely build upon existing legislation but go further: 4MLD forces senior management within Obliged Entities to review their risk framework and to determine (and document) how they arrive at their Risk- Based decisions whilst providing guidance on the factors they have to consider. 4AMLD mandates new customer due diligence checking requirements. For many organisations relying exclusively on manual processes will no longer be an option. Regulators are sensibly encouraging firms to use RegTech to meet the requirements imposed by 4AMLD which explicitly allows electronic ID for verification. Only time will tell whether the concerns expressed above are justified. One thing is certain – 4MLD will force changes in both compliance practices and company culture and technology looks like it can provide real, and much needed, assistance. Author: Jane Jee Follow: @kompliglobal