On 14 May 2018, the Council of the EU adopted the Fifth Anti-Money Laundering Directive (5MLD). The changes will complement the existing preventive legal framework by setting out additional measures to better counter the financing of terrorism and to ensure increased transparency of financial transactions and legal entities – without hindering the normal functioning of payment systems.
In particular, once 5MLD comes into force, cryptocurrency exchanges and custodian wallet providers will be subject to the same obligations to implement preventative measures and report suspicious activity as other firms under the Fourth Anti-Money Laundering Directive (4MLD), including requiring them to exercise customer due diligence.
The terror attacks that took place in Europe in 2016 and the ‘Panama Papers’ revelations highlighted new trends in the way in which terrorist groups finance and conduct their operations, through the use of modern technology such as alternative financial systems.
5MLD, which amends 4MLD, aims to:
- address risks linked to