5MLD and cryptoassets – AML rules extended to disrupters

With cryptoasset businesses in the United Kingdom falling under anti-money laundering rules for the first time, they are faced with a step change in their regulatory obligations as well as new fee-paying requirements. Sushil Kuner and Ian Mason explore the impact of 5MLD on firms carrying out certain cryptoasset activities.

Sushil Kuner is a principal associate in law firm Gowling WLG’s financial services regulatory team. Ian Mason is a partner and head of the financial services regulatory team. Contact them on sushil.kuner@gowlingwlg.com and ian.mason@gowlingwlg.com.

The Fourth Money Laundering Directive ((EU) 2015/849) (4MLD) sets out the European Union’s anti-money laundering and counter-terrorist financing (AML) framework, which is largely aligned with the Financial Action Task Force’s (FATF) international AML standards. The Fifth Money Laundering Directive ((EU) 2018/843) (5MLD) amended this in 2018 and, for the first time, imposes new AML requirements on cryptocurrency exchanges and custodians operating in Europe. Member states were obliged to implement this by 10 January 2020 to introduce these new requirements into national legislation, which the UK has done by amending the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).