On August 11, 2016, the EBA published an Opinion on the Commission’s proposed amendments to the Fourth Anti-Money Laundering Directive and its application to virtual currencies. The Commission is proposing to bring custodian wallet providers (CWPs) and virtual currency exchange platforms (VCEPs) within the scope of the 4MLD so that they would, among other things, have to apply customer due diligence controls when exchanging virtual currencies for real currencies, and put in place policies and procedures to detect, prevent and report money laundering and terrorist financing.
The EBA has given several recommendations which it believes the Commission should take into account when implementing the proposed amendments. The EBA considers that the transposition deadline of the Commission’s amendments to the 4MLD should be aligned with the current transposition deadline for 4MLD (June 26, 2017). Even with that timeframe, there would not be a lot of time for Member States to prepare for transposition, or for CWPs and VCEPs to implement the necessary policies and procedures. The Commission is also proposing to introduce a requirement that individuals who hold a management function, or are beneficial owners of CWPs and VCEPs, are fit and proper persons. However, the Commission does not stipulate what that test would consist of and the EBA recommends that more detail needs to be added to the proposed amendments to 4MLD. In addition, the EBA suggests that the final legislation should require CWPs and VCEPs to be licensed entities or registered entities without giving Member States scope to choose between the two.
The EBA agrees with the Commission that the scope of the Revised Payment Services Directive should not be extended to virtual currencies at this time because it will take further legal and other analysis to do so properly and the intention is to revise more quickly. The EBA raises the concern that bringing the CWPs and VCEPs within the scope of 4MLD without implementing a regulatory framework for the authorization and supervision of CWPs and VCEPs at the same time will lead to confusion and possible misrepresentations about their regulatory status. The EBA recommends that the amendments to 4MLD should enable regulators to easily exchange information in relation to VCEPs and CWPs.
The opinion is available at: http://www.eba.europa.eu/documents/10180/1547217/EBA+Opinion+on+the+Commission%E2%80%99s+proposal+to+bring+vi rtual+currency+entities+into+the+scope+of+4AMLD and the Commission’s amendments are available at: http://ec.europa.eu/justice/criminal/document/files/aml-directive_en.pdf.