Preventing money laundering and terrorism financing in the context of crypto-assets : a critical analysis of the fifth anti-money laundering directive

Abstract

On 9th July 2018, the fifth Anti-Money Laundering Directive (the “AMLD5”) was issued by the European Parliament. Member States of the European Union are required to transpose the directive into their respective national regulatory regimes by not later than 20 January 2020. This dissertation aims to delve into the money laundering/terrorism financing (“ML/TF”) threats presented by crypto currencies and crypto assets and then provide a critical analysis of the AMLD5, particularly in the context of crypto assets. The paper provides a breakdown of the new requirements brought on by the directive and determines whether the AMLD5 will be successful in mitigating the money laundering and terrorism financing threats which are presented by virtual currencies and crypto assets. The findings suggest that the AMLD5 presents a number of regulatory loopholes, and as a result it fails to sufficiently address the ML/TF risks associated with crypto assets. Reference is made to the Virtual Financial Assets Act (“VFA Act”) which has recently come into force in Malta, as a benchmark regulatory regime which sufficiently addresses the relevant risks.