Germany Is All Set To Implement Their Anti-Money Laundering Directive Concerning Cryptocurrency

Steven Anderson By Steven Anderson July 2, 2019 Off

The core requirements to launder money is decentralization and privacy. Cryptocurrencies whether Bitcoin, Ethereum, Litecoin or TCAT token have got it all. There are several evil implications of decentralized currency systems like Terror Funding, Human Trafficking, and overall, it is a threat to the banking system.

Kunal Barchha, Co-founder at CoinRecoil, has filed a writ petition on the circular, which was issued by the RBI.

Kunal Barchha further wrote an open letter to the Prime Minister and Finance Minister requesting them to reconsider their decision regarding the ban of the cryptocurrency.

Germany is all set to implement its anti-money laundering directive by regulating the cryptocurrency licensing requirements. The Draft Act will be coming in to force on January 01, 2020, and when it comes in to force, several wallet providers and cryptocurrency exchanges will be considered to provide financial services concerning crypto assets. All of them will have to comply with anti-money laundering rules and get a license.

The Draft Act is a reflection of the Anti-money laundering and anti-terrorism act thought necessary by the G20 decision. The scope of AML will thus be extended. The credibility of virtual assets will be mitigated by avoiding the risks of illegal usage of cryptocurrencies.

The licensing requirements will apply to the exchanging of crypto assets in the legal tender as they qualify by being a financial commission business. Acquisition agency will be eligible for licensing as they take crypto-assets on consignment to sell them to the third party. Other trades which qualify for such licensing are proprietary trading where there is an exchange of crypto assets between service provider and customer.

Multilateral trading facility qualifies by providing for automated matching of transactions where cryptocurrencies are bought and sold with cryptocurrencies.

In a limited custody business where the custody of security qualifies the process as a custody business. The draft act by virtue of AMLD5 will be putting all the relevant financial services which are related to crypto assets under the licensing requirements. While the amendments in KWG will remove the already existing uncertainties, some crucial questions will be unanswered as well.

There are several uncertainties concerning licensing obligations and the custody obligations between security tokens and non-security tokens. These questions are unanswered. It is also not clear as to if custodians can carry the crypto custody business and even if they can carry on crypto custody business by holding the private keys or if the regulatory demands are beyond that.