InsideBitcoins.com

European Cryptocurrency Exchanges Get Ready for Heightened Scrutiny with AMLD5

European Cryptocurrency Exchanges Get Ready for Heightened Scrutiny with AMLD5

As the EU members adopt AMLD5, cryptocurrency exchanges in the region will be forced to increase their compliance costs. The Fifth Anti-Money Laundering Directive brings these entities under the purview of existing regulators.

Increased costs for exchanges

The cryptocurrency exchanges based in EU member states will have to comply with the AMLD5, which came into effect on January 10. Though the member states haven’t formed a consensus on the application and execution of the new anti-money laundering guidance, the exchanges will have to brace for impact. The Paypers, a Dutch media outlet, said that the directive could shoot up compliance costs for cryptocurrency exchanges.

European Cryptocurrency Exchanges Get Ready for Heightened Scrutiny with AMLD5

The exchanges will first have to register with their respective local financial regulators and follow the AML and Know-your-Customer (KYC) guidelines. It will be impossible for these entities to create customer accounts based on minimum documentation. The financial regulators will be able to request data from the exchanges that they deem relevant to their compliance requirements.

Exchanges are preparing for change

Some exchanges don’t want to bear the increased compliance requirements and costs in the EU. Deribit, a Dutch crypto platform, is already planning to shift to Panama, where it could enjoy fewer restrictions and compliance oversight.

Kraken, a US-based crypto exchange giant, said that compliance costs for exchanges are on the increase. In December 2019, CryptoBridge had to shut down within two months of pledging compliance with the AMLD5. While the requirements could be too harsh for the exchanges, they may also help in developing trust for these platforms. As they will now comply with the industry standards followed by banks and other financial institutions, they will appear as safer and more trustworthy options for the users. This may further incentivize users to dive into the crypto sector.

The AMLD5 guidelines are less severe than those suggested by the Financial Action Task Force (FATF). The AMLD guidelines are concerned with fiat to crypto transactions only, but both focus extensively on preventing money laundering via anonymized digital currencies.

Top brokers for buying and trading cryptocurrencies

  • Platform
  • Features
  • Rating
  • Visit Site
  • US-Friendly
  • Paypal accepted
  • 12+ cryptocurrencies
4.5/5

Visit Site
75% of retail investors lose money.
eToro Reviews

    eToro Reviews

    https://insidebitcoins.com/visit/etoro-newsCreate your account
    Hide eToro Reviews
    • Best broker for non-US countries
    • Trade crypto CFDs, forex and stocks
    • No withdrawal or deposit fees
    4.5/5

    Visit Site
    80.5% of retail investors lose money.
    Plus500 Reviews

      Plus500 Reviews

      https://insidebitcoins.com/visit/plus500-newsCreate your account
      Hide Plus500 Reviews
      Remember, all trading carries risk. Past performance is no guarantee of future results.
      Avatar

      Sherlock Gomes loves to write and express his views on anything related to Crypto. He has been covering Crypto for more than two years now. He likes Bitcoin and Cardano. He also writes on Finance, Healthcare, and Technology among other stuff. He can be reached by e-mail on sherlockg@insidebitcoins.com