Crypto Info

Matis Mäeker, recently appointed head of Estonia’s anti-money laundering government agency believes Estonia should scrap its current crypto regulations and start again, he said in an interview with the local news outlet Eesti Ekspress. If you are wondering why… here is a UK brief you might like to refresh on.

Crypto currencies offer a semi-anonymous and decentralised alternative to traditional fiat currencies. Their convertible nature means that cryptocurrencies can be exchanged for real money or other virtual currencies, presenting a real risk of money laundering and other financial crimes.

For example, the greater degree of anonymity compared to traditional payment methods may allow anonymous funding and transfers, particularly if the sender and recipient are not adequately identified. An added complication is that often customer and transaction records may be held by entities located in different jurisdictions, making it harder for regulators to gain access.

Cryptocurrency exchanges are the most common way for consumers to initially enter the cryptocurrency market by purchasing, exchanging and investing in cryptocurrencies. Exchanges originally offered significant anonymity which was exploited by criminals to disguise the source of illicit funds by purchasing and then selling cryptocurrencies through an exchange.

However, the drafting of the EU’s Fifth Money Laundering Directive (5AMLD) into UK legislation now brings cryptocurrency exchanges within the definition of an ‘obliged entity’, imposing greater due diligence and reporting requirements. In addition, businesses carrying on cryptocurrency activity in the UK are also being required to have robust AML processes in place, particularly to verify the identity of senders and receivers. Such businesses are also required to register with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The increased regulation in the industry places cryptocurrency exchanges and businesses under significant scrutiny.

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