The European Commission plans new measures to end the anonymity of cryptocurrencies such as Bitcoin and prepaid cards. The proposed legislation is intended to fight against money laundering and terrorist financing.
The EU plans to carry this out legally with the help of AMLD or Anti-Money Laundering Directive by bringing the platforms of virtual currency exchange under it. Thus because of this, the EU will have the authority to force these platforms or companies to conform to the already existing rules and regulations related to customer due diligence which means to track their income source and identity.
Thus in June, the EU will be proposing new measures in order to effectively end the possibility of staying anonymous by the use of Bitcoin as well as prepaid cards. Besides Bitcoin, EU also plans to make sure prepaid cards are also not kept anonymous in order to widen the customer verification requirements. It was in May, 2015 when EU adopted the 4th AMLD Package. The new regulations are intended to bring Bitcoin as well as prepaid cards along with such type of “burner” kind of anonymous currency method, under the terms of that legislation.
The document released also outlines the possibility of additional monitoring of inter-bank transfer that will take place within European community, which are not overseen by the new EU-US TFTP (Terrorist Financing Tracking Programme) currently.
According to Valdis Dombrovskis, the Vice President of EU commission:
“With today’s Action Plan we are moving swiftly to clamp down on terrorist financing, starting with legislative proposals in the coming months. We must cut off terrorists’ access to funds, enable authorities to better track financial flows to prevent devastating attacks such as those in Paris last year, and ensure that money laundering and terrorist financing is sanctioned in all Member States.
“We want to improve the oversight of the many financial means used by terrorists, from cash and cultural artefacts to virtual currencies and anonymous pre-paid cards, while avoiding unnecessary obstacles to the functioning of payments and financial markets for ordinary, law-abiding citizens.”
EU officials believe banning Bitcoin will effectually prevent the conversion of Bitcoin to “real money” within the areas under the EU. The primary effect such legislation is likely to have will be in areas of purchases of drugs and other illicit products from Dark Web.
In January, Europol published a report which states that they didn’t find any direct evidence that terrorists are using anonymous virtual currencies such Bitcoin to finance their operations.
The United Kingdom’s HM Treasury Department also pre-empted the finding of Europol citing the investigation made by the National Criminal Agency in the year 2014. According to this investigation, there was a minor proof that suggests that Bitcoin and other digital currencies played a role in terrorists financing. It was also stated that the majority of Bitcoin transactions or other such transactions were of very small amounts.
Besides this, the Treasury Department of UK also stated that there are evidences that suggest Bitcoin and other virtual currencies were in fact used by criminals. But, as of now, there is no proof that Bitcoin has finally become the widely adopted mode of payment in the larger criminal community.