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Europe Issues New Anti-Money Laundering Directive (AMLD)

January 14, 2020
Ross Peili


Europe Issues New Anti-Money Laundering Directive (AMLD)

BRUSSELS – The new (5th) Anti Money Laundering Directive (AMLD) that was initially proposed as early as May 2018 is finally effective since January 10, 2020.

Essentially the new regulation will subject cryptocurrency exchange markets, as well as custodian wallet provider companies under the same umbrella with traditional European banking and/or financial institutions. 

What does that mean for your business or your digital assets? We’re going to find out in this article. 

Read More: Where To Start With Crypto In 2020? (In-Depth Guide For Beginners)

Amendments to Directive (EU) 2015/849

Basically, the new additions will be attached as amendments to the existing AML Directive, and among some replacements/polishing between established rules, new regulations subjecting cryptocurrencies are introduced to the final directive.

More specifically, providers engaged in exchange services between virtual currencies and fiat currencies are now subject to the full directive similar to traditional financial institutions.

The same applies to custodian wallet providers, as well as individuals trading or acting as intermediaries in the trade of works of art, including when this is carried out by art galleries and auction houses, where the value of the transaction, or a series of linked transactions, amounts to ten thousand euros or more. 

The key to understanding how cryptocurrency exchange markets and other crypto vendors are affected is to understand what the initial AMLD stands for. 

In a nutshell, EU’s power-brokers seek a clear image of the cryptocurrency landscape and security protocols including KYC and other automated ‘whistleblowing’ mechanisms shall be implemented by all legal entities involved in the money business whether physical or digital. 

As I understand, most cryptocurrency exchanges, brokers, and wallet providers will have to follow Coinbase’s model, which makes sure your personal data including your name, address, phone, id, physical banking account as well as cryptocurrency activity is available to your respective government and by extent to EU in a transparent fashion. 

The authoritarian glove, in this case, won’t necessarily need a warrant or an investigative ‘green light’ to proceed in ‘scanning’ a crypto business, an individual crypto owner/trader, or even specific blockchain wallets. Instead, all the data should be transparent with the government, even if set as ‘private’ to customers.   

In addition, the EU proposes that country members should create centralized databases specifically tailored to monitor, mine, and store data regarding crypto users’ identities and wallet addresses, which in their own turn could be utilized by the EU (whatever that means).  

Read More: Switzerland Introduces New Legislation Subjecting Secondary DLT Markets

How the new AMLD affect crypto businesses?

After the mt.gox related Alexander Vinnik was arrested by Greek authorities and handed over to French investigators, and the seizure of Molina Lee from Crypto Capital again in European soil, the EU showcases that money-laundering activity utilizing cryptocurrency infrastructure is not something that will be skipped or in any case tolerated by the Union.  

As a matter of fact, EU regulators and financial watchdogs have demonstrated that even the most advanced ‘masking’ techniques that would include a series of anonymity tokens, and a diverse range of crypto exchanges to cover the malicious actor’s tracks, will still be quite easy to spot and address in the Eurozone, and if anything the new AMLD additions will almost automate the process of spotting illegal or suspicious activity. 

I know that this is the one opposite thing to what Satoshi Nakamoto envisioned when he proposed the initial white paper for Bitcoin, but we’re at a point where you either go with the flow, or you’re labeled as ‘illegal’. 

Many cryptocurrency exchanges, including the world’s most popular platform Binance, changed their HQ frequently exactly to avoid being a government ‘whistleblower’, essentially giving away free information regarding their customers’ crypto activity.

Nevertheless, Binance, like many other exchanges are now forced to abide, otherwise, they could lose their operational license and go from top to bottom in a Bitconnect fashion if regulators fancy that.

As previously mentioned, Coinbase was among the first exchanges/custodian crypto vaults that introduced a mandatory KYC, and while most people were against it in the first place, it now seems that everyone will be following suit. 

Similar to the EU’s GDPR regulation, this AMLD will affect also international companies that operate in the Eurozone, or have at least one European customer. Pretty convenient huh? 

From a corporate perspective, you should analogize the situation and the wisest thing would be to comply with the new regulations and make it public on your website or UI/app, as well as to the EU Commission through various forms found on their official portal. 

This will ensure both customers and regulators see your business is legit and clear of fraudulent activity. At the same time, it creates a stream of customer data that will be used by the government / tax authorities / EU regulators, but it is also a good excuse to get in-depth insights on what’s going on in your business. 

Should you tackle with the possibility that some terrorist organization might be financing their efforts through your platform, or some oligarch is laundering black money using your crypto wallets, you should consider changing your business model from www to onion lol.

Otherwise, the new AMLD will only benefit your business’ sovereignty while at the same time feed mother Europe with critical financial data for every single head in the alliance. 

Read More: Blockchain Finance: What To Expect In 2020

How your personal crypto assets are affected?

Now, in case you’re not a cryptocurrency exchange billionaire, the new directive also affects your personal crypto assets. If you’re simply a regular trader, holder, or macro investor, you should have in mind that your crypto activity is monitored equivalent to your central bank account. 

I’m not saying that you should be insta-worried about it, but you should consider this fact when trading, changing wallets, changing exchanges etc. At the same time, it is important to note that you might need a crypto-accountant from 2020 and on even if you’re just macro investing.

That does not necessarily mean that you’ll have to be taxed on your earnings, but a crypto-accountant can help you navigate through the regulatory field while keeping your assets safe and explainable in case they are summoned under question.  

Let me guys know what you think about this AMLD directive in the comments below or feel free to hit me on Twitter (@rosspeili). Is this the crypto future you were waiting for?