In order to better counter the financing of terrorism and ensure increased transparency, the European Commission has proposed amendments to Directive (EU) 2015/849 (the Fourth Anti-Money Laundering Directive or "4AMLD").
Earlier in February, the Commission presented an “Action Plan” for strengthening the fight against terrorist financing, following the November terrorist attacks in Paris. In a July press release, the Commission announced that it has proposed to bring virtual currency exchange platforms and custodian wallet providers under the scope of the Anti-Money Laundering Directive.
However, the Commission noted that mere inclusion of virtual exchange platforms and custodian wallet providers will not entirely address the issue of anonymity attached to virtual currency transactions, as users can also transact without these entities. As such, it recommends that national Financial Intelligence Units (FIUs) should be able to associate virtual currency addresses to the identity of the owner of virtual currencies.
The new AMLD draft seeks the creation of a database consisting of information on users of virtual currencies, linking the cryptocurrency users to their real-world identities. Such a move would effectively end the “anonymity” feature that has been associated with digital currencies for long.
“To combat the risks related to the anonymity, national Financial Intelligence Units (FIUs) should be able to associate virtual currency addresses to the identity of the owner of virtual currencies. In addition, the possibility to allow users to self-declare to designated authorities on a voluntary basis should be further assessed”, the document reads.
In line with the above view point, the AMLD draft states:
“The report shall be accompanied, if necessary, by appropriate proposals, including, where appropriate, with respect to virtual currencies, empowerments to set-up and maintain a central database registering users' identities and wallet addresses accessible to FIUs, as well as self-declaration forms for the use of virtual currency users.”
