Category Archives: AMLD5

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Cryprus to Integrate EU’s Anti-Money Laundering Framework

Cryprus to Integrate EU’s Anti-Money Laundering Framework

The Cyprus Securities and Exchange Commission (CySEC) has requested the integration of the European Union’s (EU) Fifth Anti-Money Laundering Directive (AMLD5) into its national law to bring local crypto regulations under its provisions.

In order to provide protection against terrorist financing and money laundering, AMLD5 was introduced on 9 July 2018. The directive establishes a new legal framework to keep a check on crypto-related service providers and businesses.

Moreover, all EU members are required to integrate AMLD5 into their legal systems no later than 20 January 2020. AMLD5 requires the member states to enforce stricter transparency requirements related to anonymous payments. The directive aims at bringing wallet providers and crypto exchanges under regulations.

CySEC maintained that various fintech-related enquires were received by its CySEC Innovation Hub. Apparently, many of those enquires did not fall “within the existing regulatory framework”.

Therefore, the agency has suggested to integrate AMLD5 into the existing laws of the country. Moreover, it has requested to bring additional crypto-related activities under AML/CFT obligations. Some of these activities include participation in and provision of financial services related to an issuer’s offer and/or sale of a crypto asset, exchange between crypto assets and transfer of virtual assets.

The agency noted a suggestion to include the said activities due to its understanding of potential threats currently posed to the integrity of the market and investors.

In addition to Cyprus, Ireland’s cabinet also approved the integration of AMLD5 into the country’s law earlier this year.

 

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More Than 2 out of 3 Crypto Exchanges Don’t Know Their Customers (KYC)

A recent study held among 25 different cryptocurrency exchanges across Europe and the US revealed that only 32% perform full KYC identity checks on their users, writes Bitcoinist.

The study conducted by analytics house P.A.ID Strategies that out of these 25 exchanges, all based in the US and Europe, two-thirds failed to comply the requirements of the so-called Know Your Customer (KYC) procedure. New anti-money laundering regulations are due to come into effect in 2019, and it’s thought that the KYC checks will encourage crypto exchanges to examine their operations more carefully in terms of compliance.

The exchanges not compliant with KYC regulations were found to be allowing users to trade in cryptocurrency and fiat without providing official ID, or even going through the standard KYC check. Most of these allowed users to start trading simply by providing a telephone number and a current email address. Some 68% of those questioned fell into this non-compliance category.

John Devlin, chief analyst at P.A.ID, commented: “Cryptocurrency wallets and exchanges want to enjoy the same trust as the wider traditional financial services, but for this to happen they need to rise above the sometimes-dubious reputation of cryptocurrencies’ past and be seen as ‘model citizens’ of the economy.”

To give more credibility to the space things are about to change, as the European Parliament’s Committee on Economic and Monetary Affairs has stated that cryptocurrency exchanges, as well as wallet providers, need to identify their users. The directive known as AMLD5 will be in effect from June 2019.

The new rules will ensure that the branding of a non-compliant company will be impacted, but signing up to an exchange need not be complicated for the user. Kalle Marsal, COO at Mitek, a company selling identity verification technology, which commissioned the study held by P.A.ID, points out:

“Wallets and exchanges want to change perceptions of lawlessness and it’s a relatively straightforward fix. Identity verification processes can be—if implemented correctly—simple for the customer and no barrier to signing up. …By incorporating systems that are just as future-looking as cryptocurrency itself, exchanges and wallets can be both competitive and compliant with regulatory demands.”

 

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