A Guide to Anti-Money Laundering for Crypto Firms

5MLD and Cryptoccurency - the 5th Anti-Money Laundering Directive

AML Compliance Crypto Knowledge & Training

Although much of the 5MLD (5th Anti-Money Laundering Directive) content updates the 4MLD, it makes a new legislative step in the treatment of virtual currencies. Specifically, there are significant new 5MLD cryptocurrency considerations.

Key 5MLD cryptocurrency measures

  • A legal definition of cryptocurrency, which may broadly be regarded as “a digital representation of value that can be digitally transferred, stored or traded and is accepted… as a medium of exchange”.
  • Cryptocurrencies and cryptocurrency exchanges are considered “obliged entities”, and face the same CFT/AML regulations applied to financial institutions under 4MLD. Practically, this involves an obligation to perform customer due diligence (CDD), and submit suspicious activity reports (SAR).
  • 5MLD cryptocurrency reporting obligations actually go further than those in 4MLD, by giving Financial Intelligence Units (FIU) a mandate to obtain the addresses and identities of owners of virtual currency – and so push back against the anonymity associated with the use of cryptocurrency.
  • 5MLD also introduces regulation for providers of cryptocurrency exchanges and wallets – which must now be registered with the competent authorities in their domestic locations, for example, Germany’s BaFin, or the UK’s Financial Conduct Authority.

5MLD cryptocurrencyThe introduction of regulations paves the way for EU operators to introduce more 5MLD compliant cryptocurrency products and, crucially, to compete with Asian markets. Remigio Bonguliemi, Chief Compliance Officer of Trade.io, points out that safety is key to cryptocurrency confidence: “If you’re launching centralized products, having regulations is incredibly helpful to be able to sleep at night, and know that you’re not doing anything illegal.”

Comply With 5MLD Cryptocurrency Regulations

ComplyAdvantage’s data and solutions can be used across financial services to make sure business meet and exceed regulatory expectations.

Find Out More

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

Copyright © 2022 IVXS UK Limited (trading as ComplyAdvantage).