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European Parliament approves stricter regulation for cryptocurrencies

The European Parliament has approved stricter rules that aim to prevent the use of cryptocurrencies for money laundering and terrorism financing activities.

The European Parliament and the Council reached a political agreement last December on the revision of the Fourth Anti-Money Laundering Directive. The legislative proposals were put forward by the European Commission following the bombing attacks in Paris and Brussels in 2015 and 2016.

MEP last week supported an agreement by 574 votes to 13 votes, with 60 abstentions. The agreement marks the fifth and latest update to the EU’s Anti-money laundering Directive.

The new measures include an extension of the Directive to cover all forms of tax advisory services, letting agents, art dealers, as well as electronic wallet providers and cryptocurrency exchange service providers. Among other things, it seeks to end the anonymity associated with cryptocurrencies and also address the risks linked to prepaid cards and cryptocurrencies.

Under the new rules, cryptocurrency exchange platforms and wallet providers will now have to apply customer due diligence controls, including customer verification requirements. Furthermore, these platforms and providers will also have to be registered, as will currency exchanges and cheque cashing offices, and trust or company services providers.

“Criminal behaviour hasn’t changed. 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,” Krišjānis KARIŅŠ (EPP, LV), co-rapporteur said.

The updated directive will enter into force three days after it is published in the EU’s Official Journal and member states will then have 18 months to transpose the new rules into national law.

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