In May, the Council of the European Union adopted the
new Anti-Money Laundering Directive 5 (AML5), which among other
things covers definitions and regulations for virtual
currencies.
The directive itself seeks to protect credit and financial
institutions against the risks of money laundering and terrorist
financing.
One of the distinctive elements of this directive is the clear
definition of digital currencies and outline of regulations that
virtual currency wallets must comply with. AML5 brings virtual
currency platforms and wallet providers under the scope of the
directive, and obliges them to introduce anti-money laundering
checks. The European Union is placing digital currency businesses
on the same level as banks and financial institutions, requiring
them to perform robust know your customer (KYC) checks and monitor
transactions. However, under AML5, virtual currencies can still be
exchanged between private individuals without obligatory
checks.
