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Cryptocurrencies


What are the dangers of cryptocurrencies?

Cryptocurrencies are virtual or digital currencies that can be digitally stored in a blockchain, transferred, traded, and accepted as a medium of exchange.

While they present many advantages, including, but not limited to, the ease of transfer of funds and minimal fees compared to classic financial institutions, a number of issues arise from their private nature and facility of fund transmission.

Cryptocurrencies use cryptographical technology to pseudonymize the users of digital wallets, allowing them a veil of anonymity. It is in this semi-inconspicuousness that criminals take advantage of the more than 5.563 digital currencies currently in circulation. Their use for illegal activities may include the selling/buying of illicit products or services, money laundering, or tax evasion.
cryptocurrencies and crime


The Dark Web, home to hackers, terrorists, and drug dealers amongst others, saw an estimated growth of 1$ billion of Bitcoin transactions in 2019; an increase of 14.68% compared to 2012.


What is the current legislation concerning cryptocurrencies?

In Europe, the 5th Anti-Money Laundering Directive, 5AMLD, which came into force on January 10th, 2020, defines cryptocurrency exchangers as “obliged entities.” This means that they need to adapt to the same anti-money laundering and counter financing of terrorism (AML/CFT) regulations as financial institutions.

Providers of cryptocurrency exchanges and wallets will also need to be registered with the competent authority of their local country.

cryptocurrencies and 5AMLD legislation
Furthermore, the European directive gives the mandate to national Financial Intelligence Units (FIUs) to obtain information and addresses of owners of virtual currencies and wallets so as to de-anonymize their identity and legally pursue wrongdoers.



What rules must your cryptocurrency exchanger or wallet comply to?

To be compliant with AML/CFT rules, your cryptocurrency exchange or wallet must adapt to the following basic practices as outlined in the European regulation:

  • 1

    Customer due diligence (CDD) – all your clients must be fully identified and screened against both local and international sanction lists, including Politically Exposed Persons (PEP) lists.

  • 2

    Monitor suspicious behaviour – transaction monitoring systems that can detect unusual behaviour from your clients must be set up, adapted to your company, and efficient.

  • 3

    Suspicious activity reports – you must report to your local FIU any suspicious transactions that one of more of your clients may have partaken in.



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