5th Anti-Money Laundering Directive For Crypto Services

The European Union’s 5th Anti-Money Laundering Directive (5AMLD) came into effect January 10. The regulation was entered as law on July 9, 2018 in an effort to bring increased transparency to financial transactions for pushing back against money laundering and terrorist financing across Europe.

For the first time, 5AMLD is broadening its regulatory scope by including crypto service providers like virtual-fiat exchanges or custodian wallet providers. The idea is make it more plainly knowable who’s participating in crypto transactions. The rationale is that doing so pushes back against money laundering and terrorism financing.

According to an 5AMLD fact sheet, the law will:

• increase transparency about who really owns legal entities in order to to prevent money laundering and terrorist financing via opaque structures
• give European financial regulators better access to information via centralized bank account registers
• tackle terrorist financing risks linked to anonymous use of virtual currencies and prepaid instruments
• improve the cooperation and exchange of information between anti-money laundering supervisors and with the European Central Bank
• broaden the criteria for assessing high-risk third countries and ensure a high level of safeguards for money moving to or from such countries.

The consequences for not obliging are fines, of course! Austria’s financial regulators, for example, will fine noncompliant crypto service providers a maximum of 200,000 Euros. Crypto businesses can’t keep their doors open long if they have to pay 5AMLD noncompliance fines.

How 5AMLD is affecting crypto service providers

European crypto companies are struggling to meet the new regulatory guidelines presented by 5AMLD. A number of businesses are shutting down due to the extensive know-your-customer (KYC) and anti-money laundering (AML) practices the new law calls for. The UK-based crypto wallet provider Bottle Pay announced its decision to cease operations at the end of last year. According to a company blog post published on Dec. 13, 2019:

“As we are a UK based custodial Bitcoin wallet provider, we will have to comply with the 5AMLD EU regulation coming into effect on January 10, 2020. The amount and type of extra personal information we would be required to collect from our users would alter the current user experience so radically, and so negatively, that we are not willing to force this onto our community.”

Bottle Pay shuts its doors after raising $2 million in seed funding this past September. The startup was launched just three months prior in June, offering users a tipping service that let small amounts of cryptocurrency be sent across social media networks and messenger apps

The takeaway is clear: the European Union is paying close attention to cryptocurrency and has established its first set of rules for how companies in this space must behave. Now it’s on those companies to gain compliance or risk being able to operate at all.

Reference: Cointelegraph

Tags: #AML, #AMLD, #Cryptocurrency, #EuropeanUnion

Source: https://xeonbit.com/5th-anti-money-laundering-directive-for-crypto-services/

European Central Bank president impulse for a central bank digital currency

Christine Lagarde – President of European Central Bank (ECB), supports the bank’s active involvement in the development of a central bank digital currency (CBDC) to address the demand for faster and cheaper cross-border payments.

In an interview with French business magazine Challenges published on Jan. 8, Lagarde discussed the most likely threats to the global economy in 2020, among which she named a downturn in trade and a range of uncertainties, geopolitical risks and climate change. Going further, Lagarde said that “the EU is still the most powerful economic and trading area in the world, with enormous potential.”

Taking a leading position than remaining observers

When asked about ECB’s dedication to the exploration and development of a CBDC, Lagarde emphasized the urgent demand for fast and low-cost payments, the field where she sees the taking a leading position, rather than remaining observers of a changing world. As such, Lagarde said:

“ECB will continue to assess the costs and benefits of issuing a central bank digital currency that would ensure that the general public remains able to use central bank money even if the use of physical cash eventually declines.”

Lagarde recalled that the bank continues examining the feasibility and merits of a CBDC as such means of payment could exert influence on the financial sector and transmission of monetary policy. She stipulated that the ECB formed an expert task force set to work closely with national central banks to examine the feasibility of a euro area CBDC.

When asked about current initiatives to launch a CBDC at the ECB, a representative told that:

“We are working on all aspects of CBDC, with in-depth analysis of costs and benefits of such a new form of central bank money. It will take a while before we will communicate on our conclusions.”

Crypto-friendly approach

Lagarde has previously demonstrated a friendly stance towards digital currencies, having said in December last year that ECB should be ahead of the curve regarding the demand for stablecoins.

Last September, when Lagarde was still the head of the International Monetary Fund (IMF) and nominee to be the next president of the ECB, she claimed that she would focus on making sure that institutions promptly adapt to the rapidly changing financial environment.

In the meantime, ECB remains open to the idea of a digital euro equivalent but would want to stop citizens holding too much of it.

Reference: Cointelegraph

Tags: #CBDC, #ECB, #EU, #IMF, #Stablecoins

Source: https://xeonbit.com/european-central-bank-president-impulse-for-a-central-bank-digital-currency/