Europe Committed to Tightening Digital Currency Rules by End of 2017

The European Parliament has recently released a report entitled ‘The Juncker Commission’s ten priorities: State of play at the start of 2017.’ It includes digital currencies for the first time as part of the Commission’s anti-money laundering efforts, which is a priority the Commission hopes to deliver by the end of 2017. The proposed amendments seek to reduce anonymity surrounding digital currencies including bitcoin.

Also read: ECB to EU: Tighter Regulations, Less Anonymity on Digital Currencies 

Juncker Commission’s Ten Priorities

Prior to his election as President of the European Commission, Jean-Claude Juncker set
out the policy priorities which would serve as the political mandate for his five-year term in office. With the stated aim of focusing on the ‘big things’, he outlined ten key areas in which he wanted the European Union to “make a difference and deliver concrete results for citizens,” according to the report.

The ten priorities were presented when he took office on November 1, 2014. His commission adopted all ten priorities during its first year in office. Right now is a critical time because the Commission is approaching the midway point of its mandates.

The recent report provides an overview of the work done by the Commission under Juncker’s presidency and an update of the initiatives taken for each of the ten priority areas.

Priority 7 Includes Digital Currencies

The previous publication, the ‘State of play in mid-2016‘, did not mention digital currencies. However, this latest publication did for the first time, calling them ‘virtual currencies’.

Digital currencies is part of ‘Priority 7: An area of justice and fundamental rights based on mutual trust’ under the area of ‘Fighting terrorism.’ The report outlined the Commission’s proposed amendments to the 2015 Fourth Anti-Money Laundering Directive in July last year, stating that “The issues addressed include safeguards for financial flows from high-risk third countries, EU financial intelligence units’ powers, centralised national bank and payment account registers, and risks linked to virtual currencies and anonymous pre-paid cards.”

The amendments seek to impose stricter rules on the use of digital currencies, including bitcoin, in order to reduce anonymous payments and curb the financing of terrorism, the Commission claims. Digital currency exchanges will have to increase checks on the identities of users and report suspicious transactions. The Commission wrote in the proposal that “Reducing anonymity surrounding virtual currencies will contribute to increasing trust of their good-faith users.” In addition, the proposed amendments state:

Obliged entities [digital currency exchanges] need to collect, process and record personal data, and sometimes to share such data with public authorities (such as FIUs) or with private entities within the same group.

Digital Currencies, Part of Priorities

At the end of the report, European Parliament President Martin Schulz, Council President Robert Fico, and European Commission President Jean-Claude Juncker jointly declared that while they will continue to work on all legislative proposals, some initiatives will be given priority treatment. This will “ensure substantial progress and, where possible, their delivery before the end of 2017,” they wrote.

Among the six areas of priorities is “better protecting the security of our citizens,” the trio declared. One of the ways they suggested is through “improved instruments to criminalise terrorism and fight against money laundering and terrorist financing,” which digital currencies fall under.

While the report only mentioned the end of 2017 as the promised deadline, the Fourth Anti-Money Laundering Directive was enacted on June 25, 2015 with a two-year window for implementation. All EU members must be compliant with the new mandates by June 26, 2017. This means, the rules concerning digital currencies could also be implemented by that date.

When do you think the European Commission will actually adopt the proposed Fourth Anti-Money Laundering Directive which includes stricter rules on digital currencies? Let us know in the comments section below.

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Images courtesy of ABCNews, European Commission, European Parliament

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