European Parliament requires cryptocurrency exchanges for customer verification

The European Parliament has voted in favor of stricter regulations in the crypto sector. Wallet exchanges and providers should introduce identity verification procedures. The platforms must request registration in order to offer their services. The new measures come with the latest update of EU anti-money laundering regulations.

Members of the European Parliament yesterday supported an agreement reached by the European Council in December to make cryptocurrencies have a "stricter regulation". The decision was approved with 574 votes, 13 against and 60 abstentions, announced the press service of the parliament. The agreement represents the fifth and last update of EU regulations against money laundering.

The amendments are intended to address "the risks linked to virtual currencies". To end the anonymity associated with them, cryptocurrency trading platforms and wallet providers will be required to introduce customer due diligence controls, including identity verification procedures. In the future, these companies will request registration to offer regulated exchange and payment services.

The changes also point to the anonymity provided by payment card issuers. MEPs have approved the reduction of the threshold to identify the holders of prepaid and virtual cards, from the 250 euros that are stipulated now, to 150 euros. This will affect companies that offer change from cryptocurrencies to fiat money as part of non-custodial payment services.

European officials say they are, in part, introducing measures in response to the terrorist attacks of 2015 and 2016 in Paris and Brussels, as well as the leaks of the Panama Papers. "Criminals use anonymity to launder their illicit profits or finance terrorism," said Krišjānis Kariņš, one of the rapporteurs on the amendments. In his words, the new legislation "will address threats to our citizens by adjusting the rules that regulate virtual currencies and anonymous prepaid cards."

"We lose billions of euros in money laundering, terrorist financing and tax evasion, money that should be used to finance our hospitals, schools and infrastructure," added his colleague Judith Sargentini. "We introduce stricter measures, expanding the duty of financial institutions to carry out the due diligence of the client. This will illuminate those who hide behind the companies and trusts, and should keep our financial systems clean, "he insisted.