Wednesday, May 27, 2020

New EU Law To Give Banks ZERO Power Over Cryptocurrency-Related Activities

The European Union’s (EU) Fifth Anti-Money Laundering Directive (AMLD5) will come into effect soon. This new EU law will give banks zero power over cryptocurrency-related activities. In addition, cryptocurrency-related businesses in Europe will gain more access to financial services just like every other legitimate business.

New EU Law To Give Banks ZERO Power Over Cryptocurrency-Related Activities; Companies to Gain More Access to Financial Services

Based on the report, cryptocurrency companies in Europe will now be able to access financial services just like any other legitimate business. This is because the Fifth Anti-Money Laundering Directive (AMLD5) was signed into law on July 9, 2018. And the AMLD5 came into force on January 10, 2020.

What’s more, the AMLD5 categorizes virtual assets and their providers as ‘obliged entities’. As a consequence, companies in the Blockchain sector also fall under the same legal category as banks, payment processors, gaming, and gambling-related services. This means that banks can no longer turn away crypto companies that comply with the Financial Action Task Force’s (FATF) regulations.

Banks Can Still Choose Crypto Companies They’ll Like to Serve

Despite the AMLD5 in place, banks can still choose individual companies in the crypto space to offer services to. In the past, financial institutions will have to provide evidence for refusing or terminating customer relationships with a crypto company. Also, banks will no longer shut out crypto companies because they deal with virtual currencies.

The difficulty in accessing financial services has been one of the biggest hurdles for companies in the crypto space. Several businesses have shut down due to the difficulty in opening bank accounts. Others migrated to crypto-friendly countries. Even in Malta where the region is known as the “Blockchain Island”, a number of companies still noted a setback in opening bank accounts.

New Directive to Enable Customers to Purchase Cryptocurrencies

Nonetheless, the new directive is good news to the cryptocurrency space since customers of companies in the Blockchain space may also be able to purchase crypto using their bank accounts. As a consequence, it opens more doors to accessing cryptocurrencies and in a convenient manner. Besides, crypto companies can’t shut out of the mainstream economy.

Similarly, it will ensure that crypto companies put more effort into carrying out KYC and AML procedures on their platform in a bid to meet the FATF’s guidelines. Once that is in place, cryptocurrency use for illegal activities will drop significantly.

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