The European Banking Authority (EBA) has published an opinion welcoming the European Commission’s (the Commission) proposal to bring virtual currency exchange platforms and custodian wallet providers within the scope of the Fourth Money Laundering Directive (4MLD).
The EBA states that bringing virtual currency exchange platforms and custodian wallet providers under the 4MLD, as proposed by the Commission, will be an important step to mitigate risks of money laundering and terrorist financing that arise from the use of virtual currencies. However, the EBA believes that certain clarifications need to be made to the proposed amendments to the 4MLD and that Member State national competent authorities (NCAs) should be equipped with the appropriate tools to be able to effectively supervise the proposed requirements.
The EBA’s opinion, which is addressed to the Commission, the European Parliament and the Council of the European Union, sets out a series of proposals that the three EU institutions should consider before finalising amendments to the 4MLD in the second half of 2016. In particular, the EBA recommends that implementation deadlines for the amendments should be set in a way that facilitates their consistent implementation across the EU, and in a way that enables NCAs to exchange information more easily and efficiently.
Furthermore, the EBA argues that NCA sanction powers as proposed in the Commission’s amendments to the 4MLD should be retained, while transactions in virtual currencies should remain outside of the scope of the Payment Services Directive. The EBA also believes that measures that clarify the regulatory status of virtual exchange platforms and custodian wallet providers should be implemented in order to avoid risks of misrepresentation, including whether these entities should be allowed to carry out regulated financial activities at the same time as carrying out virtual currency transactions. More detail should also be provided to clarify how NCAs should carry out fit and proper tests for these new entities, as well as to clarify the details and scope of the licencing or registration regime proposed.