EU: “those who keep bitcoins in their wallet need to know their customers just as banks do”

The new rules would lower the threshold for identifying the holders of anonymous prepaid cards from €250 to €150. Sargentini pointed out that this change was of huge importance to national authorities: “French authorities insisted, saying that rental cars used in attacks in France have been paid by anonymous cards.”

To increase transparency and respond to the latest technological developments, Members of the European Parliament voted on 19 April in favour of an update of EU legislation on money laundering and terrorism financing (also regulations in the crypto sector).

The new directive is aimed at preventing the EU’s financial system from being used to fund criminal activities. It also includes a ban on the large-scale concealment of funds and creates more transparency with regards to the true ownership of companies and trusts.

Previously the registers of beneficial owners of companies were accessible only to those who could prove a legitimate interest, journalists and NGOs, for example. Under the new legislation, they would be accessible to all and national registers would be interconnected to facilitate cooperation between member states.

Prepaid cards and crypto currencies

The new legislation would also require virtual currency exchange platforms and custodian wallet providers to exercise due diligence and end the anonymity associated with such exchanges. “Now we say that platform providers and those who keep bitcoins in their wallet need to know their customers just as banks do. It is quite revolutionary,” explained Sargentini.

Kariņš noted that the owners of crypto currencies will want to convert them into euro should they wish to buy something: “That’s when the crypto currencies will enter the European banking system and at this point we want banks to ask who this customer is and where the [virtual] money originates.”

The new legislation aims to close down criminal financing without hindering the normal functioning of the financial markets and payment systems such as prepaid debit cards. “The goal is to create problems for criminals but not for ordinary and honest Europeans,” said Karinš. “We do not want to push people back to cash,” adds Sargentini.