The European Union just signed its fifth AML Directive, called 5AMLD on January 10, 2020. The new legislation offers sweeping powers in order to comply with law authorities and organizations. It aims to increase the current AML procedure in the EU and track dirty money that would be sent to offshore paradises. Besides this, restrictive demands are placed on crypto companies.
The reason why the update was done is that it was shown rich people in the past simply diverted money through special financial frameworks that were operating in a clear, legal grey area. Right now, the public is aware of illegal financial activities that are going on in finances. Governments try to oblige with EU laws but it is not easy to follow the money. 5AMLD tries to help.
A Breakdown of 5AMLD
The AML directive by the EU was built in order to deal with different shady financial operations that were done by businesses and individuals from all around the world. 5 AMLD is just the most recent of the AML laws in place. The bill was pushed as an emergency one that aimed to counter increased terrorist financing and money laundering in Europe.
The brand new measures introduced are going to increase the EU’s financial sector security but the crypto market is also going to be affected. 5AMLD is the very first time when crypto service providers are added to financial institutions that are covered. This includes custodian wallet providers and fiat exchanges.
Numerous investors believe that anonymity is the most important part and a clear characteristic of the entire cryptocurrency industry. With 5AMLD, digital currencies are going to be under the influence of laws. Numerous terrorist attacks happened in Europe so now lawmakers do all that they can in order to identify people behind crypto transactions. The goal of the new laws is to be able to see if crypto transactions are going to be used to finance illegal activities.
5AMLD increases transparency in regard to legal entity owners. European regulators now receive more access to the information that is stored in the registers of centralized bank accounts. Companies that are cryptocurrency-based are now faced with increasing pressure in order to force them to implement AML measures as new clients are registered. 5AMLD will surely increase this compliance at a European scale. Laws practically aim to improve the information offered when an exchange happens between financial entities and the central banks, all through anti-money laundering services that act as supervisors.
The EU is a really strong political and economic hub. Hundreds of millions of really wealthy consumers are based in the Union countries. Current business laws allow a pretty high transparency. New laws are meant to change this and make it much easier for authorities to fight money laundering.
5AMLD is definitely going to be impactful and based on results, we can expect similar laws to be created all around the world. This does include countries like Switzerland, which are independent but do need to protect the financial sector.