Source: OJ L, 2024/1624, 19.6.2024Current language: EN
- Anti-money laundering
Basic legislative acts
- Anti-money laundering regulation (AMLR)
Article 20 Customer due diligence measures
Summary What does Article 20 of the Anti-money laundering regulation (AMLR) say?
This is a foundational article that sets out the full suite of customer due diligence (CDD) measures that obliged entities must apply.
It defines what CDD actually consists of in practice: identifying and verifying customers and their beneficial owners, understanding the purpose of business relationships, checking against targeted financial sanctions lists, screening for politically exposed persons, and conducting ongoing transaction monitoring.
Crucially, the article also establishes that the depth of these measures is not one-size-fits-all — it must be calibrated to the individual risk profile of each customer and relationship, drawing on the entity's own business-wide risk assessment (carried out under Article 10) and the risk variables and factors set out in the regulation's annexes.
Higher risk triggers enhanced due diligence; lower risk permits a simplified approach.
Important points:
- Apply the full set of customer due diligence measures, covering identity verification, beneficial ownership, sanctions screening, PEP status, business understanding, and ongoing monitoring.
- Scale the intensity of these measures based on an individual risk analysis for each customer and relationship, informed by the business-wide risk assessment under Article 10.
- Be able to demonstrate to supervisors at all times that the measures applied are appropriate given the identified money laundering and terrorist financing risks.
Springlex's summary of the article, a reading aid, not a substitute for the legal text.
For the purpose of conducting customer due diligence, obliged entities shall apply all of the following measures:
identifying the customer and verifying the customer’s identity;
identifying the beneficial owners and taking reasonable measures to verify their identity so that the obliged entity is satisfied that it knows who the beneficial owner is and that it understands the ownership and control structure of the customer;
assessing and, as appropriate, obtaining information on and understanding the purpose and intended nature of the business relationship or the occasional transactions;
verifying whether the customer or the beneficial owners are subject to targeted financial sanctions, and, in the case of a customer or party to a legal arrangement who is a legal entity, whether natural or legal persons subject to targeted financial sanctions control the legal entity or have more than 50 % of the proprietary rights of that legal entity or majority interest in it, whether individually or collectively;
assessing and, as appropriate, obtaining information on the nature of the customers’ business, including, in the case of undertakings, whether they carry out activities, or of their employment or occupation;
conducting ongoing monitoring of the business relationship including scrutiny of transactions undertaken throughout the course of the business relationship to ensure that the transactions being conducted are consistent with the obliged entity’s knowledge of the customer, the business and risk profile, including where necessary the source of funds;
determining whether the customer, the beneficial owner of the customer and, where relevant, the person on whose behalf or for the benefit of whom a transaction or activity is being carried out is a politically exposed person, a family member or person known to be a close associate;
where a transaction or activity is being conducted on behalf of or for the benefit of natural persons other than the customer, identifying and verifying the identity of those natural persons;
verifying that any person purporting to act on behalf of the customer is so authorised and identify and verify their identity.
Obliged entities shall determine the extent of the measures referred to in paragraph 1 on the basis of an individual analysis of the risks of money laundering and terrorist financing having regard to the specific characteristics of the client and of the business relationship or occasional transaction, and taking into account the business-wide risk assessment by the obliged entity pursuant to Article 10 and the money laundering and terrorist financing variables set out in Annex I as well as the risk factors set out in Annexes II and III.
Where obliged entities identify an increased risk of money laundering or terrorist financing they shall apply enhanced due diligence measures pursuant to Section 4 of this Chapter. Where situations of lower risk are identified, obliged entities may apply simplified due diligence measures pursuant to Section 3 of this Chapter.
By 10 July 2026, AMLA shall issue guidelines on the risk variables and risk factors to be taken into account by obliged entities when entering into business relationships or carrying out occasional transactions.
Obliged entities shall at all times be able to demonstrate to their supervisors that the measures taken are appropriate in view of the risks of money laundering and terrorist financing that have been identified.
Springlex and this text is meant purely as a documentation tool and has no legal effect. No liability is assumed for its content. The authentic version of this act is the one published in the Official Journal of the European Union.
Definition
supervisor
Definition
funds or other assets
Definition
politically exposed person
- in a Member State:
- heads of State, heads of government, ministers and deputy or assistant ministers;
- members of parliament or of similar legislative bodies;
- members of the governing bodies of political parties that hold seats in national executive or legislative bodies, or in regional or local executive or legislative bodies representing constituencies of at least 50 000 inhabitants;
- members of supreme courts, of constitutional courts or of other high-level judicial bodies, the decisions of which are not subject to further appeal, except in exceptional circumstances;
- members of courts of auditors or of the boards of central banks;
- ambassadors, chargés d’affaires and high-ranking officers in the armed forces;
- members of the administrative, management or supervisory bodies of enterprises controlled under any of the relationships listed in Article 22 of Directive 2013/34/EU either by the state, or, where those enterprises qualify as medium sized or large undertakings or medium sized or large groups, as defined in Article 3(3), (4), (6) and (7) of that Directive, by regional or local authorities;
- heads of regional and local authorities, including groupings of municipalities and metropolitan regions, with at least 50 000 inhabitants;
- other prominent public functions provided for by Member States;
- in an international organisation:
- the highest ranking officials, their deputies and members of the board or equivalent functions of an international organisation;
- representatives to a Member State or to the Union;
- at Union level:
functions at the level of Union institutions and bodies that are equivalent to those listed in points (a) (i), (ii), (iv), (v) and (vi);
- in a third country:
functions that are equivalent to those listed in point (a);
Definition
parent undertaking
- for groups whose head office is located in the Union, an obliged entity that is a parent undertaking as defined in Article 2, point (9), of Directive 2013/34/EU that is not itself a subsidiary of another undertaking in the Union, provided that at least one subsidiary undertaking is an obliged entity;
- for groups whose head office is located outside of the Union, where at least two subsidiary undertakings are obliged entities established in the Union, an undertaking within that group established in the Union that:
- is an obliged entity;
- is an undertaking that is not a subsidiary of another undertaking that is an obliged entity established in the Union;
- has a sufficient prominence within the group and a sufficient understanding of the operations of the group that are subject to the requirements of this Regulation; and
- is given the responsibility of implementing group-wide requirements under Chapter II, Section 2 of this Regulation;
Definition
family member
- a spouse, or a person in a registered partnership or civil union or in a similar arrangement;
- a child and a spouse of, or a person in a registered partnership or civil union or in a similar arrangement with, that child;
- a parent;
- for the functions referred to in point (34)(a)(i) and equivalent functions at Union level or in a third country, a sibling;
Definition
property
Definition
express trust
Definition
legal arrangement
Definition
terrorist financing
Definition
targeted financial sanctions
Definition
group
Definition
money laundering
Definition
third country
Definition
person known to be a close associate
- a natural person who is known to have joint beneficial ownership of legal entities or legal arrangements, or any other close business relations, with a politically exposed person;
- a natural person who has sole beneficial ownership of a legal entity or legal arrangement which is known to have been set up for the de facto benefit of a politically exposed person;
Definition
funds
Definition
beneficial owner
Definition
business relationship