The European Council of the EU has set forth guidelines in which it will seek to regulate virtual currencies and curb terrorist funding opportunities. In light of several high terror attacks within the EU in 2015, many regulators and citizens called for tighter surveillance and anti-terrorism operations.
Calls for tighter control over virtual currencies after reports were released when it was suggested that some terrorists might have benefited from using Bitcoin to fund their activities. While such claims that terrorists have a unique advantage in using Bitcoin, the European Council is still mobilizing to ensure that tighter restrictions and surveillance can and will be possible within their member states and beyond. In addition for calls to regulate Bitcoin and virtual currencies, there’s been calls to put tighter controls over pre-paid cards.
The Council’s primary objectives encompass the following:
- The field of virtual currencies,
- The strengthening of the access to information, such as access to bank and payment account information, by Financial Intelligence Units (FIUs),
- Appropriate measures on pre-paid instruments, and
- Measures against illicit cash movements;
Much of what the meeting centered around was ensuring that the 4th Anti Money Laundering Directive be updated and amended with relevant learnings from the Council’s research. The goal for amendment of the 4th AMLD is by the end of 2016, no later.
As has been shown through both vocal supporters of Bitcoin as well as objective policy and lawmakers, Bitcoin doesn’t necessarily make for an easy route to launder money and give terrorists access to funds because of its public record. Europol, the European Union’s law enforcement agency stated that there is no direct evidence that terrorists are using Bitcoin or virtual currencies to fund their activities.
There is also a question of how a variety of countries within the European Union and beyond which are liberal in their use of virtual currencies will adopt the measures set forth by the Council. The Council is encouraging an “intensified” cooperation and exchange of information among member nations to accomplish the goals set forth.
European Council Vice-President Dombrovskis stated in a speech:
“We will also propose a legislation to harmonize definitions of Member States’ criminal offences and sanctions for money laundering. Today all Member States have made money laundering illegal. But there are differences between Member States as to the definition of money laundering and the sanctions applied. These differences create obstacles in cross-border judicial and police cooperation to tackle this crime. Our objective is to present proposals, by the end of 2016, to amend, to change, this situation.”
What will likely be a target of such amendments to the AMLD will be the end of, or limiting of the anonymous nature of Bitcoin and other virtual currency transactions, as well as transactions under pre-paid cards. It is unclear how such changes in the nature of how these businesses report information about their users will impact the industry overall. It could be negligible in theory, as just extra identify verification steps could be what’s needed.
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