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EU trade associations have co-signed a statement to the European Commission calling for an exemption for low-value e-vouchers and e-money transactions to remain in the EU’s anti-money laundering (AML) rules.
Vouchers with e-money commonly sold in retail shops risk disappearing if the exemption foreseen under Article 12 of the 4th Anti-Money Laundering Directive (4th AMLD) is not kept in the regulation revising the AML directive, lobbyists have warned the commission.
E-money gift cards enable customers to make low-value digital gifts. Neither the giver nor the recipient has to identify themselves.
In the current EU anti-money laundering/counter-terrorism financing (AML/CTF) legislation, member states are allowed to exempt obliged entities from carrying out certain customer due diligence (CDD) measures with respect to e-money products with a proven low risk.
To be able to make use of the exemption, various requirements must be met. These include a low threshold of €150 for offline transactions and €50 in the case of remote and/or online transactions.
In addition, issuers are obliged to conduct sufficient monitoring of the transactions or business relationships to detect unusual or suspicious transactions.
However, the exemption is no longer included in the latest proposal, which was launched last year, and the trade associations have criticised this as being “without any justification”.
“The signatories of this position paper firmly advise and call on the co-legislators to retain the exemption for low-risk, low-value e-money products in the AML Regulation for the benefit of customers, proportionate data collection, financial inclusion and to support digitisation and innovative business models,” the letter says.
According to the trade associations, the exemption is important in maintaining the attractiveness of these products and provides customers with easy access to digital means of payment.
If introduced, as well as risking the viability of these products exiting the market, this would entail negative consequences for issuers, their customers, merchants and businesses distributing such products, as well as for the digital economy as a whole.
Customers benefit from the CDD exemption as it enables uncomplicated access to low-risk e-money products. These products, the letter says, can easily be bought at sales outlets without the need of having a bank account or a payment card, and therefore support financial inclusion.
The CDD exemption is also important in terms of data protection. For many transactions, identification of the customer is not necessary, and without the exemption, customers will no longer be able to pay small amounts online with e-money products without having to identify themselves, which the associations argue means there would be no possibility to make anonymous low-risk and low-value e-money transactions on the internet or at the physical point of sale.
Moreover, the associations’ position suggests that the exemption is needed to protect issuers from the cost of CDD for these low-value transactions, which they claim the risk does not warrant and for which consumers would be unwilling to undergo lengthy verification procedures.
The trade associations that signed the letter included influential payments lobbyists in the EU, such as the Electronic Money Association, the European Payment Institutions Federation (EPIF) and the Payments Innovation Forum, as well as member state-level organisations and merchant groups such as EuroCommerce and Independent Retail Europe.
