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Finland's Finance Ministry is preparing legislation by which financial service providers offering cryptocurrency trade opportunities would be subject to the same national regulations that govern other currency transactions. This includes rules that seek to prevent money laundering and organised crime activities.



The proposed legislative reform is based on forthcoming changes from the European Union, after December decisions from the European Parliament and the European Council to pursue the same agenda. EU authorities say they are targeting bitcoin anonymity in order to tackle tax evasion and other crimes.

The Finance Ministry's legislative advisor Armi Taipale says the Finnish changes will make banks and insurance companies responsible for declaring all of their cryptocurrency dealings. The institutions will also be required to inform the authorities if they suspect a case of money laundering or the funding of terrorist organisations, for example.

In future, cryptocurrency exchange platforms - for example, companies like Prasos and Coiner in Finland - will also be subservient to the same laws. Taipale says this means that trade facilitators will be expected to not just identify their customers but also know what they are up to.

"In other words, virtual currencies such as bitcoin now allow customers to remain anonymous, so the idea is to bring things out into the open," she says.

Calls have increased worldwide for better international rules regarding the use of cryptocurrencies, as their anonymity has made them a useful tool for illicit activities such as buying drugs and firearms and hiding wealth from authorities. For example, Germany and France announced last week that they will present a joint proposal for regulating bitcoin at the G20 meeting of finance ministers in March.

Consumer protection currently non-existent

The Finnish Finance Ministry's Taipale says that consumers also have something to gain if the trade of cryptocurrencies is better regulated.

"At the moment, there is no customer protection in place to ensure that a promised transaction actually takes place. Our proposal takes the investor protection perspective strongly into account," she says.

The EU plans to publish the latest version of its money laundering directive in May or June, after which the Member States will have between 12 and 18 months to implement it. Taipale says her ministry in Finland hopes to have its proposal ready for parliamentary consideration by September-October.

The EU directive will also contain instructions for the establishment of a unified bank and payment account register in the union.