The 5th anti-money laundering directive of the European Union came into effect on 10 January. The objective of the directive is to purge the crypto establishments of the issues that commonly and generally prevail. This regulation was already entered as a law in the year 2018.
The directive is encouraging the participation of crypto service providers which is inclusive of virtual-fiat exchanges and custodian wallet providers with a belief that crypto affairs will be transparent and cognizant to the participants.
Predictable Evils to be Removed by the Money Laundering Directive
The European Commission has charted out a list of predictable evils and the upliftment their removal would induce. The anti-money laundering directive would enhance the transparency of the crypto transactions and of the legal entities who are involved in the act.
Financial regulators from Europe will have better access to information via central banks. Terrorist financing will be reduced to a great degree because the law will improve the cooperation between anti-money laundering supervisors and the European central banks. The directive also promises high security for money transfers.
Not complying with the regulations will lead to serious consequences like paying fines.
The Potency of 5AMLD
Many crypto service providers have not reciprocated positively to such a law. Bottle Pay, a crypto wallet service based in the UK, for example, ceased to operate by the end of September last year. According to Bottle Pay, compliance with the set of guidelines of the directive will lead to alteration of user experience because the new law emphasizes heavily on know-your-customer (KYC) norms. Meanwhile, other service providers are striving to meet regulatory guidelines to the best of their abilities. The European Union has focused entirely on the proper functioning of crypto service providers so that the entry of crypto evils can be barred. Although pretty stringent in its belief the directives are a necessity today.