CATF Reports Jan. 9, 2017, 2:46pm


Since its recent creation by Satoshi Nakamoto in 2009, Bitcoin has been a highly innovative, yet essentially unregulated, form of financial exchange. As a form of currency, it has shown rapid growth since its outset, and by 2013 “the value of all bitcoins in circulation exceeded USS$1.5 billion with millions of dollars’ worth of bitcoins exchanged daily”. On Monday, January 2nd, 2017, the European Parliament and Council proposed revising Directive (EU) 2015/849 and Directive 2009/101/EC to better protect virtual payment methods like Bitcoin from exploitation by terrorist groups. The Parliament and Council’s proposal cited a need for better transparency and more accountability for financial exchange service providers by requiring them to now monitor and report suspicious activity, as the gap in the current system “enables terrorist groups to transfer money… by concealing transfers or by benefiting from a certain degree of anonymity on those platforms”, the EconoTimes originally reported.

Among the many amendments proposed, the revisions that could hold the most impactful weight include risk mitigating conditions that make due diligence measures mandatory by restricting virtual currency transactions within specific European Union (EU) member states, or by applying transaction limits of EUR 150, a cutback from the current EUR 250 ceiling. Secondly, more thorough due diligence measures are proposed to allow for more intensive vetting of existing and new customer’s identity, as well as of high risk third countries transactions. To further supplement these measures, more emphasis is to be placed on pinpointing not only the circumstances and nature of the business relationship, but also the source of funds. Lastly, the Parliament and Council propose more fluid, unmediated and timely exchange of information among the European Commission, member states and Financial Intelligence Units (FIUs) towards increased transparency.

From Econotimes:  

“The European Parliament and the Council of the European Union have proposed amending a directive on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. […]

It noted that providers of exchange services between virtual currencies and fiat currencies, as well as custodian wallet providers, are currently under no obligation to identify suspicious activity. This enables terrorist groups to transfer money into the EU’s financial system or within virtual currency networks by concealing transfers or by benefiting from a certain degree of anonymity on those platforms."

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