In a sweeping effort to present an action plan to combat and curb terrorism financing, the European Commission is looking ascertain more information from virtual currency service providers in Europe. The services under the scanner include exchanges and wallets.
The European Commission – the executive arm of the European Union – is looking to make several amendments to the Anti Money Laundering Directive (AMLD) in a new proposal through an action plan [PDF]. The amendments, if enforced, are likely to be mandated by the second quarter of 2016.
If the changes come into effect, exchanges and wallet providers across Europe are likely to be mandated to identify their users. The push for the amendments comes during a time of increased regulatory debate about cryptocurrencies following recent terrorist attacks in Paris. The focus here is on the anonymity provided by virtual currency exchange and prepaid cards.
The proposal for the amendment comes within a week of Europe’s central law enforcement authority – Europol, publishing a report explicitly stating that there is no evidence of ISIS using bitcoin as a means to finance their activities.
The ‘Action Plan’ does not present any evidence of virtual currencies being used to finance terrorism. However, the European Commission is including virtual currency exchanges and wallet providers under the changes proposed.
An excerpt from the action plan also made light of protecting citizens’ fundamental rights, which, the Commission states, will pay heed to.
… further steps to close off the options for terrorist financing may also touch on the lives and the economic activity of citizens and companies throughout the Union.
The Commission will take into account the balance between the need to increase security and the need to protect fundamental rights including data protection, and economic freedoms.
The current Anti-Money Laundering Directive, as of May 2015, makes no mention of virtual or cryptocurrencies. If and when virtual currencies are included among AMLD directives, anonymity during transaction exchanges between virtual and fiat currencies will be obsolete.
The press release of the action plan makes light of ‘tackling terrorist financing risks linked to virtual currencies,’ states:
The Commission proposes to bring virtual currency exchange platforms under the scope of the Anti-Money Laundering Directive, so that these platforms have to apply customer due diligence controls when exchanging virtual for real currencies, ending the anonymity associated with such exchanges.
Similar efforts to tackle anonymity also extend to prepaid cards, with the Commission proposing to lower the threshold required for identifying users and expanding into several customer verifications.
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Last modified: March 4, 2021 4:46 PM