Digital Currency Intermediaries to be regulated under 4th Anti-Money Laundering Directive

4AML Directive is to come into force.

Since the Paris attacks the EU commission has sped up their agenda to add cryptocurrency to the 4th AML directive.

Here are some of the main features of 4AMLD:

Obligated entities were previously required to identity and verify the identity of a customer based on information from a ‘reliable and independent’ source.

Now they will be required to also:

Identify the beneficial owner (article 13);

Understand the purpose of the business relationship;

Monitor the customer relationship on ongoing basis.

Obligated Entities shall determine application of above measures on risk-sensitive basis (article 13.2). But, in any event, this work should be done before carrying out a transaction for a customer (article 14). For cryptocurrency intermediaries, it is wise to start to implement these measures gradually and add operational controls in advance of these becoming a requirement.