The European Commission proposed a list of changes, which would prevent terrorists and money launderers from using virtual currencies, such as bitcoins. The proposal would revise existing anti-money laundering (AML) protections.
If the proposal is accepted, virtual currency exchanges and wallet providers will be brought under the EU’s Anti-Money Laundering Directive. This means they have to apply ‘due-diligence controls’ “ending the anonymity associated with such exchanges”. Frans Timmermans, First Vice-President of the commission, said these actions are connecting the international security:
“Today’s proposals will help national authorities to track down people who hide their finances in order to commit crimes such as terrorism. Member States will be able to get and share vital information about who really owns companies or trusts, who is dealing in online currencies, and who is using pre-paid cards. Making public the information on who is behind companies and trusts should also be a strong deterrent for potential tax evaders.”
Věra Jourová, the EU’s Commissioner for Justice, Consumers and Gender Equality, also made a statement about the proposal:
“Today, we are putting forward stricter transparency rules to cut terrorist financing and step up our fight against money laundering and tax avoidance. The update of the Fourth Anti-Money Laundering Directive will prevent any loopholes in Europe for terrorists, criminals or anyone trying to play with taxation rules to finance their activities. Better cooperation to fight these issues will make the difference.”
The proposal had other important points too, which aimed at tax avoidance and money laundering. These included lowering the ownership threshold of those in trusts whose identities must be made public. Also, key actions would include increased protections for whistleblowers and additional information sharing between EU member states.
Due to the increased terrorist risk, the European Union has taken aggressive steps against virtual currencies this year. They first gathered in Brussels to discuss maintaining higher control over virtual currencies following the November 13 terrorist attacks in Paris. In February, the European Parliament issued a task force on virtual currencies for technology research.
Following the decision, the proposal related will be submitted to the European Parliament for consultation and adoption. After that, EU member states need to individually implement the new changes and other counter-terrorism financing actions by the end of the year.