Yesterday - 10th of January 2020, the EU's 5th Anty-Money Laundering Directive came into effect. It was passed by the European Commission back in 2018 and it basically defines very strict regulations to the financial transactions, bringing clarity who's behind certain money transfers. The main goal here is for a firm control of the money transfers that can prevent Terrorist funding in Europe and money-laundering. This is directly affecting the crypto transactions, which until now were relatively anonymous compared to the corresponding bank services.

Directly affected by this are Crypto Exchanges and Custodian wallets(wallets that store the private keys in a server from a company for the user) based in Europe. Here is what is the goal of the directive according to it's fact sheet:

• Improving transparency on the real owners of companies
• Improving transparency on the real owners of trusts
• Interconnection of the beneficial ownership registers at EU level
• Lifting the anonymity on electronic money products (prepaid cards) in particular when used online
• Extending Anti-Money Laundering and Counter Terrorism financing rules to virtual currencies, tax related services, and traders in works of art
• Broadening the criteria for assessing high-risk third countries and improving checks on transactions involving such countries
• Setting up centralised bank account registers or retrieval systems
• Enhancing the powers of EU Financial Intelligence Units and facilitating their cooperation
• Enhancing cooperation between financial supervisory authorities

What is important to understand is that many Europe based companies will be forced are already forced to require KYC(know your customer) verification and additional AML practices that definitely will change the user experience of the community which probably none of us will enjoy.

There are businesses that already closed doors because of this and the expectation is that there will be more, because the punishments for not complying with the 5AMLD is fines. And Those fines are significant as up to 200 000 Euros.

So what we should get from that, is to expect more and more KYC requirements to pop-up on places where we were to not required to provide our personal data to. 

I hope you find this post informative.