Lawmakers in Spain are working on amending the nation’s anti-money laundering and terrorist financing laws to be in compliance with European Union law, six months after the EU’s deadline.
A proposed amendment published over a week ago will require virtual currency service providers to register with the Bank of Spain. If enacted, the law will place Spain in compliance with the EU's 5th Anti Money-Laundering Directive (AMLD5), the bloc-wide mandate introduced in 2018, to strengthen preventative measures against financial crime.
To get things moving even faster, the public comment period on the amendment ends today; typically, the comment period is 60 to 90 days.
EU member nations had 18 months to comply with the new directive. In February, it sent warning letters to eight countries, including Spain, urging them to get moving on amending their AML laws.
Mariana Gospodinova, general manager of virtual currency platform Crypto.com’s Europe operations, told CoinDesk the understanding of digital аssets has evolved greatly since the AMLD55 was first published. The abundance of new information, some of which came directly from companies seeking to be regulated in certain jurisdictions, led to a steep learning curve. This has helped regulators understand the risks associated with crypto, and offer comprehensive amendments that will improve risk mitigation and management, she said.
“States may have benefited from a further extension of the implementation period and each country may have had their own reasoning as to why [there were] delays - from political circumstances to [a] lack of resource[s] to comply within the period given,” Gospodinova told CoinDesk via email.
Under Spain’s new law, crypto-to-fiat exchanges, crypto exchanges, e-wallet providers and those who have custody of customers' private keys will be subject to national regulation and registration.
A transitional provision calls for all these entities to register their services with the Bank of Spain within nine months from the enactment of the law.
“The Draft Law advances in the reinforcement of the money laundering and terrorist financing control system, incorporating the new community provisions and including additional improvements in the current regulation to increase the effectiveness of prevention mechanisms,” the government website said.
Although the EU provides direction, it is ultimately the decision of each member nation’s regulator to provide details on how it will deal with entities that are not conforming to local crypto rules and regulations, Gospodinova said.
Although the United Kingdom left the EU at the end of January this year, it transposed the new AML laws before its exit. Gospodinova said the United Kingdom’s financial authority, FCA, is diligently monitoring crypto firms servicing its residents and publishing warnings on its frequently updated website clarifying risks associated with engaging in activities not licensed by regulators.
In EU countries that have already complied with AMLD5, crypto firms, especially smaller companies, have complained about the added costs of compliance, which may drive them out of the country.
The EU directive also outlines stringent know-your-customer (KYC) regulations that reinforce the law introduced by the Financial Action Task Force (FATF), the international financial crimes watchdog: the travel rule.
“At the moment, crypto transactions are still unidentified in terms of ownership while they remain transparent in terms of movement. The anonymity of blockchain transactions will change with the implementation of the FATF travel rule, which aims to identify the sender and recipient of all crypto transactions,” Gospodinova said.
According to the document published by the Spanish government, the reinforcement of an identification system is among the proposed amendments, stating, “In no case shall the obligated subjects maintain business relationships or carry out operations with individuals or legal entities that have not been duly identified.”
Gospodinova said there has been a significant improvement in the level of KYC and customer due diligence procedures employed by the industry. In her view, it is of utmost importance that companies meet the latest global standards to manage risk and prevent money laundering.
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