The Third European Union Money Laundering Directive (3MLD) is a legal framework that aims to prevent the use of the financial system for the purposes of money laundering and terrorist financing. It was adopted in
2005 and repealed by the Fourth European Union Money Laundering Directive (4MLD) in 2015. The 3MLD applies to a range of entities that are considered to be exposed to the risk of money laundering and terrorist financing, such as:
Financial institutions, which include credit institutions, financial intermediaries, insurance companies, investment firms, and payment service providers.
Casinos, which include both online and offline gambling services that involve wagering a stake with monetary value.
Real estate agents, which include both natural and legal persons that act as intermediaries in the buying and selling of real property or rights over it.
The 3MLD requires these entities to implement a number of measures to prevent and detect money laundering and terrorist financing, such as:
Conducting customer due diligence, which involves identifying and verifying the customer and the beneficial owner, understanding the purpose and nature of the business relationship, and applying enhanced or simplified measures depending on the level of risk.
Keeping records of customer and transaction data for at least five years after the end of the business relationship or the execution of the transaction.
Reporting suspicious transactions or activities to the competent authorities without delay and without tipping off the customer.
Establishing internal policies, procedures, and controls to ensure compliance with the 3MLD, and providing adequate training and awareness to staff.
Cooperating with the relevant supervisory and regulatory authorities and financial intelligence units.
The 3MLD does not apply to defense attorneys, as they are not considered to be obliged entities under the directive. However, the 3MLD does apply to other legal professionals, such as notaries, lawyers, and accountants, when they perform certain activities on behalf of their clients, such as:
Buying and selling of real property or business entities
Managing of client money, securities, or other assets
Opening or managing bank, savings, or securities accounts
Organizing contributions for the creation, operation, or management of companies Creating, operating, or managing trusts, companies, foundations, or similar structures References:
THE THIRD EU DIRECTIVE ON MONEY LAUNDERING AND TERRORIST FINANCING, page
11-12
Anti-money laundering and countering the financing of terrorism legislative package, page 1 CAMS Study Guide - 6th Edition, Chapter 1, Section 1.2, page 11 V

According to the Anti-Money Laundering Specialist (the 6th edition) resources, PEPs are individuals who are or have been entrusted with prominent public functions, such as heads of state, senior politicians, senior government, judicial or military officials, senior executives of state-owned corporations, or important political party officials1. PEPs pose a higher risk of money laundering and corruption due to their position and influence2. Therefore, financial institutions should apply enhanced due diligence and ongoing monitoring measures when dealing with PEPs as customers3. This includes:
Conducting enhanced ongoing monitoring of the business relationship to detect and report any suspicious transactions or activities4. This may involve more frequent reviews, higher-level approvals, or increased documentation of the transactions and the rationale behind them.
Taking adequate measures to establish the source of wealth and source of funds which are involved in the business relationship or occasional transaction. This may involve verifying the origin, legitimacy, and purpose of the funds, as well as the economic activities and assets of the PEP.
The other two options are incorrect because:
Expedite due diligence when a PEP is pre-approved by a member of senior management is not a recommended course of action, as it may compromise the quality and integrity of the due diligence process. Pre-approval by senior management does not exempt the financial institution from conducting thorough and timely due diligence on the PEP and the business relationship.
Obtain appropriate senior management approval for establishing a business relationship with a PEP from a high risk country is a necessary but not sufficient course of action, as it does not address the ongoing monitoring and source of funds aspects of the PEP risk management. Senior management approval is required for establishing or continuing a business relationship with a PEP, regardless of the country of origin or residence of the PEP.
References:
1: ACAMS, CAMS Study Guide, 6th Edition, Chapter 4, p. 83 2: ACAMS, CAMS Study Guide, 6th Edition, Chapter 4, p. 84 3: ACAMS, CAMS Study Guide, 6th Edition, Chapter 4, p. 85 4: ACAMS, CAMS Study Guide, 6th Edition, Chapter 4, p. 86 : ACAMS, CAMS Study Guide, 6th Edition, Chapter 4, p. 87 : ACAMS, CAMS Study Guide, 6th Edition, Chapter 4, p. 86 : ACAMS, CAMS Study Guide, 6th Edition, Chapter 4, p.
87 : ACAMS, CAMS Study Guide, 6th Edition, Chapter 4, p. 88 : ACAMS, CAMS Study Guide, 6th Edition, Chapter 4, p. 88 : ACAMS, CAMS Study Guide, 6th Edition, Chapter 4, p. 88 : ACAMS, CAMS Study Guide,
6th Edition, Chapter 4, p. 88

Explanation/Reference: http://files.acams.org/pdfs/English_Study_Guide/Chapter_4.pdf