EBA publishes an Opinion on the Commission's proposal to bring virtual currency entities in the scope of the Anti-Money Laundering Directive

11 August 2016

In an Opinion issued today, the EBA welcomed the Commission's proposal to bring virtual currency exchange platforms and custodian wallet providers within the scope of the 4th Anti-Money Laundering Directive. The Authority also makes several recommendations aimed at supporting the consistent pan-EU implementation and supervision of the proposals that the Commission had published on 5 July 2016.
 
The EBA said that bringing virtual currency exchange platforms and custodian wallet providers under the 4th Anti-Money Laundering Directive, as proposed by the European Commission, will be an important step to mitigate risks of money laundering and terrorist financing that arise from the use of virtual currencies. However, the EBA added that clarifications to these amendments are required and that competent authorities across the EU should be equipped with the appropriate tools to be able to effectively supervise the proposed requirements. 
 
The Opinion, which is addressed to the EU Commission, EU Parliament and EU Council, sets out a series of proposals that the three EU institutions should consider before finalising amendments to the 4th Anti-Money Laundering Directive in the second half of 2016. In particular, the EBA recommended that implementation deadlines for the amendments should be set in a way that facilitates their consistent implementation across the EU, and in a way that enables competent authorities to exchange information more easily and efficiently.
 
Furthermore, national sanction powers as proposed in the EC's amendments should be retained, while transactions in virtual currencies should remain outside of the scope of the Payment Services Directive. Finally, the EBA believes that measures that clarify the regulatory status of virtual exchange platforms and custodian wallet providers should be implemented in order to avoid risks of misrepresentation, including whether these entities should be allowed to carry out regulated financial activities at the same time as carrying out virtual currency transactions. More detail should also be provided to clarify how competent authorities should carry out fit and proper tests for these new entities, as well as to clarify the details and scope of the licencing or registration regime proposed.
 
The Commission had published its proposals for amendments to the 4th Anti-Money Laundering Directive on 5 July 2016. These included bringing virtual currency exchange platforms and custodian wallet providers within the scope of the Directive. If adopted, these proposals would implement some of the recommendations that the EBA had published in July 2014 (EBA/Op/2014/18).

Legal basis and next steps

The EBA's competence to deliver this Opinion is based on Articles 34(1), 56, and 9(2) of Regulation (EU) No 1093/2010, ‘the EBA Regulation'), as Anti-Money Laundering and Counter-Terrorist Financing relate to the EBA's area of competence.
 
In addition, the EBA is fulfilling its mandate under Article 9 of the EBA Regulation, which requires the EBA to "monitor new and existing financial activities", to "adopt guidelines and recommendations with a view to promoting the safety and soundness of markets and convergence of regulatory practice", and to "achieve a coordinated approach to the regulatory and supervisory treatment of new or innovative financial activities and provide advice [..] to present to the European Parliament, the Council and the Commission".
 

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