By the end of the second quarter of 2016 several targeted amendments may be made to the Fourth Anti-Money Laundering Directive (AMLD4) affecting the anonymity of virtual currency exchanges and prepaid cards. 

Both payment instruments are regarded as possible means of concealing financial transactions given the anonymity that they assure. In order to provide more transparency, the European Commission in its Action Plan proposes to consider virtual currencies under the scope of the AMLD4, thus enhancing the regulatory potential of this document.

In its current version, the AMLD4 does not mention crypto- or virtual currencies manifestly, only containing the notion of “anonymous e-money instruments”. This cannot be considered a referral to cryptocurrencies since they are not e-money under EU’s vocabulary. Once virtual currencies are associated with AMLD4 provisions, the anonymous exchange between virtual and fiat currencies will no longer be possible.

As far as prepaid cards are concerned, the European Commission proposes to introduce so-called “customer due diligence” thus demanding vendors to verify the identity of prepaid cards’ customers.  

The proposal comes only a week after Europol, the EU’s central law enforcement authority, published a report stating there is no evidence that ISIL uses bitcoin to finance its activity.

Today’s press release indicates that the alteration of AMLD4 was discussed and agreed upon during the extraordinary Justice and Home Affairs Council that took place on 20 November 2015. In the wake of Paris bombings, French financial authorities have been increasingly lobbying for toughening restrictions on financial technologies enabling anonymous money transfers (including bitcoin-related services). As domestic measures, in the aftermath of Paris massacre, French interior ministry proposed, among all, the prohibition of public Wi-Fi access and the ban of Tor network. Following this line, Michel Sapin, French minister of finance (supported by his German counterpart, Wolfgang Schäuble) proposed to the European Commission a set of actions to strengthen governmental control over the financial sphere.


Anna Lavinskaya