Cryptocurrency firms close down as a result of EU 5AMLD
The 5AMLD requires providers of crypto platforms and wallets to identify their customers for anti-money laundering purposes. Many are expected to cease operations, at least in the EU, rather than compromise their customers' privacy.
Simplecoin, a cryptocurrency 'mining pool' set up to enable collaborative discovery of new virtual currency coins, and Chopcoin, a Bitcoin gaming platform, will close before 5AMLD comes into force. Both companies have notified their users that they must withdraw their balances within weeks, said crypto-assets expert David Zaslowsky, Chairman of the New York litigation department of law firm Baker McKenzie.
Simplecoin, which operates from the Netherlands, posted a notice on its website stating that users have until tomorrow (20 December 2019) to withdraw any remaining balances. On that date, the wallets and the mining service will be taken offline, although a basic version of the website will remain accessible until 31 December 2019, allowing people to delete their account information. The venture will cease all operations the following day.
Although some EU Member States, including Germany, Italy and the Netherlands are expected to transpose the 5AMLD into law by the 10 January deadline, many others may not: the European Commission was forced to take enforcement action against several Member States who were up to 18 months late in implementing the Fourth Anti-Money Laundering Directive. Some are yet to fully completed it.
The UK has undertaken to implement the 5AMLD, despite Brexit. It has even published draft legislation and consulted on it, but the legislative timetable was disrupted by the calling of a general election. The Conservative government has now promised to push the Bill through, along with the Registration of Overseas Entities Bill, which will promote transparency of beneficial ownership of UK property.
The 5AMLD also introduces centrally determined obligations for performing customer due-diligence; stricter identification requirements for pre-paid card purchases; and the end of anonymity and privacy for bank accounts and safe deposit boxes. It also requires all express trusts and their beneficial owners to be registered in central national registers from 10 March 2020.
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