The European Parliament has finally reached an agreement to enforce closer regulation of cryptocurrencies. After the agreement with the European Council that closer regulation is needed (December 2017) to prevent the abuse of money laundering and terrorism in the crypto world, this April we are seeing a great initiative on the project.
As the press release revealed, the EU Parliament members support this decision which seeks to completely erode any anonymity linked to cryptocurrencies, exchange platforms, and custodian wallet providers. The 574 votes for and 13 votes against with 60 abstentions showed that cryptocurrencies are meant to be regulated.
As the MEP and co-rapporteur Krisjanis Karins from Latvia said:
“Criminal behavior hasn’t changed. In fact, criminals use anonymity to launder their illicit proceeds or finance terrorism. This legislation helps address the threats to our citizens and the financial sector by allowing greater access to the information about the people behind firms and by tightening rules regulating virtual currencies and anonymous prepaid cards.”
Therefore, crypto exchange platforms and service providers need to work as registered entities and must apply due diligence controls for customers while adhering to customer verification requirements.
The co-rapporteur Judith Sargentini from the Netherlands also claimed that billions of euros are lost due to money laundering, terrorism financing, tax evasion and avoidance – which could instead be going to fund schools, hospitals, and infrastructure within the EU. She added:
“With this new legislation, we introduce tougher measures, widening the duty of financial entities to undertake customer due diligence.”
At this point, the updated directive is still planned and will be officially published in the European Union’s Official Journal and go into force three days from now. According to the EU members, it will then have 18 months to transpose the rules into the nations’ respective laws.
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