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The European Parliament Has Voted for Closer Regulation for Virtual Currencies, Like Bitcoin

Virtual currency exchanges to be registered and incorporate customer verification


European Parliament to Back Closer Controls on Virtual Currencies

The fifth and latest update to the EU’s Anti-Money Laundering directive calls for closer regulation of virtual currencies, like Bitcoin (BTC), to prevent them being used for money laundering and terrorism financing.

In a bid to end the anonymity associated with virtual currencies, virtual currency exchange platforms and custodian wallet providers will, like banks, have to apply customer due diligence controls, including customer verification requirement”

— European Parliament Anti-Money Laundering Directive Update 5

The proposal is partly a response to the terrorist attacks of 2015 and 2016 in Paris and Brussels, as well as the Panama Papers leaks.

Virtual Currency Exchanges to Be Registered and Incorporate Customer Verification

The 5th update to the Directive was passed on Thursday, April 19th after it won the support of 574 MEPs (Members of the European Parliament) votes versus 13 against and 60 abstentions. Accordingly, the European Parliament’s Anti-money laundering Directive now requires calls for virtual currency exchanges to be registered, and that they apply customer due diligence controls, including customer verification requirement to their processes.

According to Krišjānis Kariņš, an MEP, “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.”

“Enormous Benefit to Developing Countries”

Judith Sargentini, another MEP, the regulation introduces “tougher measures, widening the duty of financial entities to undertake customer due diligence.” Sargentini also believes that the new rules will bring “enormous benefit to developing countries and their fight against illicit outflows of money which is desperately needed for investment in their own societies.”

The updated directive will come into force three days after its publication in the Official Journal of the European Union.  Member states will then have 18 months to transpose the new rules into national law.

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