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Strict Anti-Money Laundering Policies Causes Crypto Firms in...
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Strict Anti-Money Laundering Policies Causes Crypto Firms in the EU to Find Succor Elsewhere, Especially Deribit Exchange

The EU-based cryptocurrency exchange Deribit has announced it is moving to Panama amid new anti-money laundering regulations in the European Union that are coming into full force on Jan 10.

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The new, stricter rules coming into play will likely force out other European trading platforms going forward as well.

Deribit stated via a blog post that the move is necessary to continue offering ‘easily accessible trading’ to its customers. From Feb 10 the platform will be operated by DRB Panama Inc., a new subsidiary of the Dutch company Deribit BV.

 

The firm states that the move is a response to the fifth European Anti-Money Laundering Directive (5AMLD). The new regulations will greatly impact the way cryptocurrency exchanges do business.

5AMLD essentially extends the reach of the Fourth EU Anti-Money Laundering Directive. The regulations will impact some cryptocurrency companies for the first time, requiring exchange platforms to perform “know your customer” checks on customers at much lower thresholds than before.

Deribit claims that the Netherlands is likely to adopt a particularly strict implementation of 5AMLD. The exchange platform states that this will require large changes to its current operation. Citing increased operational costs, as well as an overall inferior customer experience, the post reads “The implementation of these changes would greatly affect the exchange and its customers.”

 

Disruptive Regulation for Deribit

Despite setting up as a new company in Panama, the exchange will still be under the leadership of CEO John Jansen. The post mentions no potential downtime during the migration, even though hardware used to run the platform will need to be relocated to London, UK.

As well as Deribit, the incoming regulations will likely disrupt some of the largest names in the cryptocurrency industry. Multiple leading exchange platforms are currently based in the European Union.

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As highlighted by a reporter Larry Cermak, both Binance and OKEx, two of the industry’s largest trading venues, are based in the European nation of Malta. They too will also be left with an ultimatum — comply with 5AMLD or move.

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Although, as some of the respondents to the above tweet point out, Malta will likely delay the implementation of 5AMLD for as long as possible — but the nation cannot put the regulatory changes off forever. Rather than fall in line with the new regulations, Cermak believes that both leading exchanges will follow Deribit to a less restrictive jurisdiction.

The 5AMLD

EU member states must implement 5AMLD provisions into their national law by January 10, 2020 and close loopholes, consider new technologies and improve transparency while still protecting personal data and adhering to international agreements.  It is estimated that between $800 billion – $2 trillion is laundered every year. As stated by Commissioner for the Security Union, Julian King, “We need to hit terrorists and criminals in their pockets – cutting off their access to money is a vital part of preventing their crimes.”
In 5AMLD, “the monitoring and registration of beneficial ownership information of trusts and similar legal arrangements should be clarified.” As each member state has its own rules and definitions for trusts, clarifications around where to register, coordination between member states, reporting and accessing the beneficial ownership information are necessary.

These entities will also require listing on central registers, which have specific time limits included below:

10 January 2020 — Beneficial ownership registers for corporate and other legal entities

10 March 2020 — Beneficial ownership registers for trusts and similar legal arrangements

10 September 2020 — Centralised automated mechanisms allowing the identification of holders of bank and payment accounts and safe-deposit boxes.

10 March 2021 — Central registers interconnected via the European Central Platform.

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