Now it’s official: The 5th Anti-Money Laundering Directive (AML5) was published in the EU’s Official Journal on the 19 June 2018. The new directive will come into force on 9 July 2018 and is to be implemented by Member States by 10 January 2020. In March, we reported on the previous political agreement concerning the 5th Anti-Money Laundering Directive within the framework of the trialogue negotiations. The AML5 represents a significant tightening of the rules for the European Union in regard to the prevention of money laundering and the financing of terrorist acts. Of particular interest to the payment and FinTech industry are the changes regarding electronic money and cryptocurrencies.
AML5: Stricter requirements for electronic money
The 5th Anti-Money Laundering Directive further tightens the conditions under which electronic money products can be issued anonymously:
- Limits for anonymous electronic money will be reduced further. The maximum top-up amount for e-money that can be issued anonymously will be reduced from 250 euros to 150 euros. In addition, the maximum cash redemption amount will be capped at only 50 euros. For German electronic money issuers, however, this does not change anything. German legislators have already set the limit to 100 euros and 20 euros respectively, which is far below the new European legal amount limits.
- However, the usability of anonymous electronic money products for online payments will be severely limited. Online payments conducted via anonymous electronic money products will not be allowed to exceed 50 euros. This restriction is likely to make many electronic money products considerably less attractive.
- Finally, acquirers may only process payments using anonymous prepaid cards from a third country if these cards were issued in the third country with similar restrictions.
New developments with regard to cryptocurrencies
The 5th Anti-Money Laundering Directive also extends the scope of money laundering law to include cryptocurrencies such as Bitcoin and Ripple. Specifically, operators of platforms through which cryptocurrencies are traded and providers of wallets for cryptocurrencies will be obligated to abide by money laundering laws. They are thus subject to the requirements of money laundering law and in particular the KYC obligations.
Even if the 5th Anti-Money Laundering Directive does not come into effect until 10 January 2020, issuers of anonymous electronic money products, cryptocurrency platform operators and wallet providers would be well advised to deal with the issue as soon as possible. The implementation measures cannot be implemented overnight. Issuers of anonymous electronic money products will have to adapt their products to the new legislation. As future obligated parties under the Anti-Money Laundering Act, cryptocurrency platform operators and wallet providers must get themselves in a position to fulfil the obligations required of them under the Anti-Money Laundering Act.
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