January 10th saw the European Union’s 5th Anti-Money laundering Directory (5AMLD) came into force. The new law will give sweeping powers to compliance organizations and law authorities. However, aside from tracking dirty money to offshore paradises, the law brings about a series of restrictive demands on crypto companies in a way never seen before. The recent introduction of the 5AMLD law cuts through the notion that there has been in the past, a network which was used by the world’s most richest and wealthiest person to siphon money to the outside world. The governments and other agencies were unable to do anything about this because there was no regulation that could stop the outflow of the funds, although it was in the public consciousness. But all this change, when the panama paper scandal hit the headlines and the all the major governments and policy makers stood up and took notice. The clout of secrecy that the rich and wealthy people enjoyed was ripped off, exposing the Panamanian Law Firm and corporate service providers Mossack Fionseca had shell companies that were used for a variety of illegal purposes.
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After the incidents, the public has become increasingly aware about these shady financial activities and have pressed the concerned authorities like the governments to take strong actions against the culprits. The government in its part is doing the best it can, but it is easier said than done when it comes to tracking rich people money. The main reason is because most rich people do not report all their income to the income tax authorities, which makes even harder to detect the money trail. In the last few years, governments and regulators have changed their stances and now they have turned their attention towards safe havens and offshore bank accounts that offer complete anonymity and secrecy to their account holders. And it is suggested that this surprise move might be the lethal blow for the crypto industry. The EU–wide Anti-Money Laundering (AML) was initially made after the incidents of Panama Papers came to light.
5AMLD is the most recent evolution of the EU Anti-Money laundering Act (AML), an emergency bill that follows increased scrutiny of money laundering and terrorist financing in Europe. This new law will increase security within the EU borders and it will also have an impact on Cryptocurrencies. The introduction of the 5AMLD will mean that service providers such as virtual-fiat exchanges and custodian wallet will fall under the regulatory ambit. Although many Crypto investors believe that the anonymity is a central part of Cryptocurrency but with the enactment of the law it will fall under the watchful eyes of the regulatory agencies. In the aftermath of series of devastating terrorist attack across Europe, the government has become very concerned about who is funding the attacks and by what means and if there is any Crypto money involved in carrying out these deadly attacks.
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As per the 5AMLD law, this will give greater access to the governments and regulators about the owner of the Cryptocurrencies in regards to information that is stored in centralized bank account registers. Organization that deals with Crypto related activity have been under a mounting pressure to implement compliance measure when it comes to registering new clients. With the advent of the law, the compliance measure will only increase on an industry wide scale, with law aiming to improve information exchange between anti-money laundering supervisors and the European Central Bank. The European Union is a combination of many European countries, which contributes a large percentage of global GDP and also has a lot of influence, on framing policies and decisions.
Source: Coin Telegraph
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