Virtual Currencies and Anti-Money Laundering – The Shortcomings of the 5th AML Directive (EU) and How to Address Them

Haffke, Lars; Fromberger, Mathias; Zimmermann, Patrick

doi:10.2139/ssrn.3328064

Cited by 7 publications

(4 citation statements)

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“…The reason is simple: tokens make use of the same technology as cryptocurrencies. They can be transferred and stored electronically and, in many cases, traded on the exact same platforms as cryptocurrencies 271 . Their design makes them usable as a "vehicle" to move economic value around, irrespective of their function.…”

Section: Regulators Rightly Plea For a Common Aml/cft Approach To All Crypto-assetsmentioning

confidence: 99%

Features of operation regulation with virtual assets for mining activities

DMYTRENKO¹,

VOLKOVA²

2021

Nauk. pr. NDFI

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The article deals with the peculiarities of suspicious transactions in financial markets related to the use of cryptocurrencies, it also studies current issues regarding the classification of virtual assets. The features of countering suspicious transactions in financial markets associated with the use of cryptocurrency are highlighted. Topical issues of taxonomy of virtual assets and risk assessment of service providers' activities in assessing the risk of operations with virtual assets related to their use in legalization operations are investigated. The concepts of regulation of virtual assets are considered. The concept of mining, the problem of the relationship of varieties of mining activity to the classification of certain types of activity, its legalization are defined, and recommendations for the classification of mining activities are given. The relationship between miners, validators and virtual asset providers (VASP) in the event of a cyberattack or in the presence of certain rights to the network has been analyzed, which leads to the classification of this type of activity as risky regarding the use of cryptocurrencies with criminal intent. It is also underlined the need to introduce a risk-based approach to countering money laundering and terrorist financing (AML / CFT) by national state supervisory and law enforcement agencies, enterprises involved in the virtual asset market, preventing threats and developing a legislative framework for regulation the crypto market and interaction on these issues at the international level.

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Section: Regulators Rightly Plea For a Common Aml/cft Approach To All Crypto-assetsmentioning

confidence: 99%

Features of operation regulation with virtual assets for mining activities

DMYTRENKO¹,

VOLKOVA²

2021

Nauk. pr. NDFI

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“…AML smernica definuje virtuálnu menu ako: "digitálny nositeľ hodnoty, ktorá nie je vydávaná ani zaručená centrálnou bankou ani orgánom verejnej moci, nie je nutne naviazaná na menu etablovanú v súlade so zákonom a ktorá nemá právny status meny ani peňazí, ale je akceptovaná fyzickými alebo právnickými osobami ako výmenný prostriedok, ktorý možno elektronicky prevádzať, uchovávať a elektronicky s ním obchodovať." 2 Ide o všeobecnú definíciu, bez bližšej špecifikácie technických vlastností virtuálnej meny. Za najväčší problém tejto definície sa v súčasnosti považuje nejasná interpretácia pojmu "výmenný prostriedok," ktorý sa stotožňuje s menovými tokenmi.…”

Section: Právna úPrava Postavenia Virtuálnej Meny Z Pohľadu V Aml Smernice a Odporúčaní Fatfunclassified

Finančno-právne aspekty regulácie virtuálnych mien z pohľadu legalizácie príjmov z trestnej činnosti a financovania terorizmu

Daudrikh¹

2021

IV.SLOVENSKO-ČESKÉ DNI DAŇOVÉHO PRÁVA: Zdaňovanie Virtuálnych Platidiel a Digitálnych Služieb - COVID-19 a Iné Aktuálne Výzvy P

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Dvadsiate prvé storočie je spojené s obrovským rozvojom technológií a zvýšeným využívaním internetu, ktorý významne prispel k rozvoju menového systému a zaviedol nový fenomén – virtuálnu menu. Z dôvodu rastúcej popularity virtuálnej meny si spracovaná téma zaslúži osobitnú pozornosť. Nasledujúci príspevok popisuje zraniteľné miesta, ktorým čelia virtuálne meny a načrtáva súčasný rámec právnej regulácie virtuálnych mien uplatňovaný na úrovni Európskej únie a Finančnej akčnej skupiny. Hlavné zistenia príspevku naznačujú, že virtuálne meny majú silný potenciál pre ďalší rozvoj, avšak predchádzať tomu by mal aj súvisiaci rozvoj hlbšej medzinárodnej legislatívnej základne.

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“…In particular, its virtuality and the variety of possible token designs give authorities a hard time enforcing tax and bank laws (Arnold et al 2019), thereby considerably increasing the risk for large-scale money laundering schemes and terrorist funding (European Union 2018; FATF 2018). European legislators reacted to this situation by updating the European Anti-Money-Laundering (AML) regulations, amending the current legal framework to specifically address money laundering risks of ICOs (Haffke et al 2019). Coming into force in 2020, EU-based companies wanting to raise funds via ICOs need now to ensure customer due-diligence measures by implementing appropriate Know-Your-Customer (KYC) processes (Haffke et al 2019).…”

Section: Introductionmentioning

confidence: 99%

“…European legislators reacted to this situation by updating the European Anti-Money-Laundering (AML) regulations, amending the current legal framework to specifically address money laundering risks of ICOs (Haffke et al 2019). Coming into force in 2020, EU-based companies wanting to raise funds via ICOs need now to ensure customer due-diligence measures by implementing appropriate Know-Your-Customer (KYC) processes (Haffke et al 2019).…”

Section: Introductionmentioning

confidence: 99%

Know-Your-Customer (KYC) Requirements for Initial Coin Offerings

Ostern

Riedel

2020

Bus Inf Syst Eng

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Blockchain technology is often proposed as an infrastructure for decentralized Know-Your-Customer (KYC) verification, i.e., a process determining whether a customer is eligible for a given transaction. The benefit of using blockchain technology lies in the expected compliance costs reduction for companies by automatically enforcing KYC-requirements, whose results are accessible by multiple financial institutions. While information systems researchers have proposed conceptual models and prototypes of blockchain-based KYC-systems, they do not yet consider severe penalties that are applicable to companies if KYC-requirements are not met. Hence, if the legal requirements for KYC-processes cannot be met, these systems are not applicable. The paper uses an objective-centered design science research approach to develop a blockchain-based KYC-system for the conduct of ICOs that is compliant-by-design. To this end, the authors first identify existing KYC-requirements and define corresponding system design objectives that are used to develop a KYC-system that automatically enforces KYC-regulations, thereby preventing money laundering and other forms of identity fraud. Second, the authors contribute to the literature by providing a blueprint for compliant-by-design blockchain-based KYC-systems, in the paper, integrated into the investment flow of an ICO. Third, the authors propose a KYC-system that is applicable in the real world, by making – due to legal certainty – KYC-processes cost-effective, i.e., the proposed blockchain-based KYC-system expectably reduces compliance costs for customers and financial organizations.

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Virtual Currencies and Anti-Money Laundering – The Shortcomings of the 5th AML Directive (EU) and How to Address Them

Cited by 7 publications

References 0 publications

Features of operation regulation with virtual assets for mining activities

Features of operation regulation with virtual assets for mining activities

Finančno-právne aspekty regulácie virtuálnych mien z pohľadu legalizácie príjmov z trestnej činnosti a financovania terorizmu

Know-Your-Customer (KYC) Requirements for Initial Coin Offerings

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