The European Banking Authority has recently published its opinion on the European Commission’s proposal to bring virtual currencies into the scope of Directive (EU) 2015/849 (fourth Anti-Money Laundering Directive).

Following the terrorist attacks in France last year, the EC rolled out an Action Plan to strengthen the fight against the financing of terrorism in February. Later in July, the EC published its proposals for amendments to the Directive, including proposals to bring custodian wallet providers (CWPs) and virtual currency exchange platforms (VCEPs) within the scope of the Directive as obliged entities.

“The EBA welcomes the Commission’s proposal to bring CWPs and VCEPs within the scope of the Directive, as this will be an important step to mitigate some of the financial crime risks arising from the use of virtual currencies”, the EBA said.

However, the EBA has set out seven proposals that the EU Commission and co-legislators should take into account when finalising the amendments to the Directive.

The first proposal relates to the unclear transposition deadlines of the amendments. The EBA pointed out that the Commission seems to be proposing to bring forward the legal transposition deadline of the Directive from 26 June 2017 to 1 January 2017 and also to require member states to have transposed the amendments to the Directive by the same deadline, i.e. 1 January 2017.

The EBA argues that as most member states are still consulting on changes to their national legal and regulatory framework, bringing the deadline forward would not only increase risks for both national authorities and obliged entities but also create significant resource pressure. In addition, CWPs and VCEPS, too, will have less than six months to implement policies and procedures to be compliant with the Directive as transposed by member states.

“The EBA is therefore of the view that sufficient time should be given to Member States, competent authorities, VCEPs and CWPs to transpose and implement the amendments, taking into account that the AML/CFT regime for VCEPs and CWPs does not yet exist. To that end, the EBA proposes to align the transposition deadline for these new amendments with the currently applicable transposition deadline, i.e. 26 June 2017, at the very earliest", it said.

In addition to sufficient time, the EBA has proposed:

• Virtual currency transactions to be left outside of the scope of Payment Services Directive (Directive (EU) 2015/2366 for now
   
• Clarifying the status of VCEPs and CWPs
   
• The amendments should enable competent authorities easily to exchange information in relation to VCEPs and CWPs
   
• The amendments should provide more detail on how competent authorities should carry out fit and proper tests of owners and controllers of VCEPs and CWPs
   
• The amendments to the Directive should clarify the scope of the proposed licensing or registration regime for VCEPs and CWPs
   
• The proposed extension of national sanction powers to VEPs and CWPs should be retained