5MLD – Cryptocurrencies

5MLD – Cryptocurrencies

The 5th Money Laundering Directive that is effective from January 10, includes the first AML regulation covering Cryptocurrencies. Its important to note that the Directive only covers transactions between cryptocurrencies and fiat currencies – not crypto to crypto transactions. The most significant changes to note are: 1. A formal definition of cryptocurrency is defined as “a digital representation of value that can be digitally transferred, stored or traded and is accepted… as a medium of exchange”. 2. 5MLD gives Financial Intelligence Units a mandate to obtain the addresses and identities of owners of virtual currency – and so push back against the anonymity associated with the use of cryptocurrency. 3. Cryptocurrencies and cryptocurrency exchanges are considered “obliged entities”, and face the same CFT/AML regulations applied to financial institutions under 4MLD. This involves an obligation to perform customer due diligence (CDD), and submit suspicious activity reports (SAR). Any businesses dealing in cryptocurrencies should take immediate steps to ensure full compliance with 5MLD or face hefty fines. Please feel free to get in touch for a free consultation if you are concerned about the implications of 5MLD for your business.

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Ayaz Siddiqui, 10th January 2020

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