A Major Step Toward Consistent Anti-Money Laundering Controls Across Member States

The European Union has introduced new Anti Money Laundering legislation designed to harmonise how member states prevent, detect, and respond to financial crime. A central feature of the reforms is the introduction of an EU-wide limit of €10,000 on large cash payments, aimed at reducing the misuse of cash for money laundering and other illicit activity.

The new framework represents a significant shift toward consistency, reducing regulatory fragmentation while still allowing flexibility where national risk profiles justify stricter controls.

The Policy Objective Behind EU AML Harmonisation

Historically, differences in national AML rules across the EU created opportunities for regulatory arbitrage, where criminal actors exploited weaker or inconsistent regimes. The new legislation seeks to close these gaps by establishing a common baseline for AML controls across all member states.

By harmonising core requirements, the EU aims to strengthen the integrity of the single market and improve cooperation between national authorities.

EU-Wide Cash Payment Limit of €10,000

One of the most visible measures in the new AML package is the introduction of a €10,000 cap on cash payments for goods and services across the EU.

Cash transactions above this threshold will be prohibited, regardless of whether payments are made in a single transaction or structured across multiple linked transactions. The measure directly targets the use of cash to obscure the origin of illicit funds and avoid detection.

Flexibility for Member States

While the €10,000 limit applies across the EU, the legislation explicitly allows member states to adopt lower national cash thresholds where justified by specific money laundering or terrorist financing risks.

This risk based flexibility recognises that cash usage patterns, criminal typologies, and economic structures vary across countries. Member states that implement lower limits must be able to demonstrate that the measures are proportionate and aligned to identified national risks.

Impact on Businesses and Reporting Entities

The new cash limit has practical implications for a wide range of businesses, particularly those operating in cash intensive sectors such as retail, luxury goods, automotive sales, real estate, and hospitality.

Reporting entities will need to:

• Review and update cash acceptance policies
• Train staff on new transaction limits
• Enhance controls to identify structured payments
• Align AML risk assessments with the new requirements

Failure to comply may expose businesses to administrative sanctions and supervisory action.

Implications for Financial Institutions

Although financial institutions already operate largely outside the cash economy, the reforms reinforce expectations around monitoring cash related activity. Banks and payment service providers will need to ensure that transaction monitoring systems remain sensitive to cash placement attempts and structuring behavior linked to the new thresholds.

The harmonised framework also supports stronger cross border supervision and information sharing.

Alignment With International AML Standards

The EU AML reforms align closely with international standards set by the Financial Action Task Force, particularly in relation to risk based approaches, cash controls, and consistent application of AML measures.

By embedding these principles into binding EU legislation, the framework moves from guidance toward enforceable consistency.

What Compliance Teams Should Do Next

Compliance professionals should begin assessing the impact of the new legislation by:

• Reviewing internal policies and procedures
• Identifying business areas affected by cash limits
• Updating customer and transaction risk assessments
• Preparing training and communication plans

Early preparation will be critical to ensuring smooth implementation and regulatory readiness.