The new anti-money laundering (AML) rules are expected to enter into force across Europe by January 10, 2020, in less than a month. This is the fifth AML directive, but the first, which will also cover the cryptocurrency market. According to experts, new regulations can have a big impact on the industry.
5AMLD. What is the new directive?
5AMLD - the fifth anti-money laundering directive (AML) - is a legal act that covers the new regulations for cryptocurrency exchanges (specifically, fiat-crypto exchanges) and the so-called insulated wallets (custodial wallets) throughout the European Union. Therefore, the new anti-money laundering and anti-terrorist financing regulations will cover the cryptocurrency industry for the first time. Stock exchanges must achieve compliance by January 10, 2020, in less than three weeks. However, not all are ready for new recipes.
Upcoming regulations will require entities offering virtual trusteeship services to comply with the AML provisions set out in 4AMLD. This means that cryptocurrency exchanges offering their services in the European Union will have to monitor customer transactions, provide information about them to relevant authorities and report any suspicious activities. Stock exchanges will also be forced to carry out the Know Your Customer (KYC) process, which means that their clients will have to provide documents confirming their identity and certify that they do not intend to conduct any malicious activities on the platform.
According to experts, the new directive may have a dramatic impact on the market. As reporter Larry Cermak notes, industry giants such as Binance and OKEx will have to immediately start complying with new regulations or stop offering their services to European customers.
Binance, the largest cryptocurrency exchange in the world, incl. thanks to its high payout limits without the "meet your customer" process (KYC), i.e. without verifying the customer's identity and home address, she would now have to change her rules. Currently allows users to withdraw two BTC without KYC. This, of course, does not comply with money laundering regulations and requires a solution. Alternatively, the stock exchange may decide to withdraw its services from the EU completely.
Some companies are already planning to terminate their operations, citing upcoming regulatory changes. BottlePay said last week that new regulations would prevent the company from continuing to offer services in a way that is consistent with its current business. The company announced that it will stop working at the end of the year. Other companies also issued similar ads, including Simplecoin and Chopcoin.
Although upcoming regulations will certainly shake the way European companies operating in the cryptocurrency industry work, some seem to accept this change. Most exchanges are already largely prepared for the new directive, as they were previously obliged to comply with similar provisions in other jurisdictions.
