Author: Cryptocurrency companies and services based in the EU have less than a month to adjust their business operations to comply with a new set of rules. As of January 10th, The Fifth Anti-Money Laundering Directive (5AMLD) will be in effect, requiring KYC, and monitoring all transactions.
5AMLD In Action From January
Regulators across the world have struggled with putting cryptocurrencies within a certain legislative framework. The European Union is on its way to put in effect an updated legislation version called the 5th Anti-Money Laundering Directive.
Among the most notable changes are those which would require cryptocurrency service providers to conduct Know-York-Customer (KYC) checks on their own. Furthermore, all transactions will be monitored, and companies will have to file suspicious activity reports (SARs) with law enforcement.
Regulators approved the updated legislation in 2018, and all members had 18 months to adjust their businesses accordingly. Time runs out on January 10th, and if the services fail to comply with any of these requirements, they would have to pay fines and penalties, or even risk being shut down.
5AMLD will affect some of the most popular cryptocurrency exchanges based in EU – Binance, Bitstamp, Bibox, Coindeal, OKEx. Unless any of these companies would like to leave the EU, they would have to comply in full.
It’s also worth noting that the U.S. introduced similar measures back in 2013, and the European Union appears to be catching up now.
Against Money Laundering
Besides the set of rules mentioned above regarding cryptocurrency services, the legislation would also require public access to information on real owners of any firm. As the name suggests, its primary goal is to help against potential illicit activities, such as money laundering.
According to co-rapporteur Judith Sargentini, these measures will provide more transparency, thus helping the EU to stop losing billions of euros:
“Annually, we lose billions of euros to money laundering, terrorism financing, tax evasion, and avoidance – money that should go to fund our hospitals, schools, and infrastructure. With this new legislation, we introduce together measures, widening the duty of financial entities to undertake customer due diligence. This will shine a light on those who hide behind companies and trust and keep our financial systems clean. These rules will also be of enormous benefit to developing countries and their fight against illicit outflows of money which is desperately needed for investment in their own societies.”
