The Council of the European Union has published the first “Presidency compromise text” version of (what is now being referred to as) the 5th Anti-money Laundering Directive (5AMLD) (it used to be “an amendment to 4AMLD” instead).

The Presidency compromise text includes a series of amendments that seem to have been made in direct response to the (a) European Central Bank’s warning that the European legislature should “take care not to appear to promote the use of privately established digital currencies“; and (b) the European Banking Authority’s concern that it would be unhelpful (at best) if the transposition date for 4AMLD was changed from 26 June 2017 to 1 January 2017, when there was still so much to do to prepare.

The first Presidency compromise text includes:

1. drafting changes that will, if made and brought into force, bring more virtual currency exchanges and wallet providers within scope than the earlier drafts had suggested – where new text is marked with bold underlining, and deleted text is shown with a strikethrough,  it is now proposed that 5AMLD will apply to “providers engaged primarily and professionally in exchange services between virtual currencies and fiat currencies” and “custodian wallet providers offering custodial services of credentials necessary to access virtual currencies“;
2. amended or new definitions of:
   • “virtual currencies” – “means a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored and traded electronically can be digitally transferred, stored or traded and functions as a medium of exchange, but does not have legal tender status in any jurisdictions and which is not funds as defined in [the second Payment Services Directive] nor monetary value stored on instruments as specified in … that Directive“; and
   • “custodian wallet providers“, which “means an entity that provides services to safeguard private keys on behalf of their customers, to holding, store and transfer virtual currencies“;
3. drafting changes that will make it harder to use anonymous pre-paid cards, especially if they were issued by a 3rd-country provider;
4. drafting changes that clarify and strengthen the beneficial ownership transparency rules for companies and trusts;
5. the insertion of 2 new articles, intended to encourage information exchange and cooperation between regulators;
6. an acceptance (at last) that 4AMLD will only be transposed into the national law of the European Member States by, and it will only be applied from, 26 June 2017 (the un-amended implementation date in 4AMLD); and
7. an obligation on the European Member States to transpose 5AMLD into their national laws, and to apply those laws, from 26 June 2017 as well.

More to follow…

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