EU Eyes New Virtual Currency, Prepaid Regs, Transaction Monitoring (Feb. 2, 2016)
European Union leaders are calling for tighter regulation of prepaid cards and virtual currencies to restrict terrorist financing and anonymous payments. The European Commission—the executive arm of the EU—also said it will consider launching an intra-EU version of a transaction monitoring agreement that has since 2010 helped detect the movement of funds by terrorists between the U.S. and EU.
In a plan released this week, the European Commission (EC) outlined new measures it’s considering in the wake of the terrorist attacks in Paris last November. The initiatives will take the form of amendments to the 4th Anti-Money Laundering Directive, which was adopted in May 2015. Among the amendments the EC plans to introduce is a proposal to bring virtual currencies, such as bitcoin, under the scope of the AML Directive, which would require virtual currency exchange platforms to identify and verify the identity of a person exchanging virtual currency for real currency, or vice versa. A January report by EU law enforcement agency Europol found no clear evidence of virtual currency being used to finance terrorism. The commission also is considering steps to require distributors of prepaid cards to verify the identity of a consumer at the time of sale or activation of the card, rather than later. Possible verification methods include cross-referencing cardholder information with data from credit reference agencies and sending a letter to the cardholder’s address containing a PIN that must be entered online before the card can be used. Such a requirement could be detrimental to what many in the prepaid industry view as low-value, low-risk products.
The EC also raised the possibility of establishing an intra-European version of the EU-U.S. Terrorist Financing Tracking Programme (TFTP)—a threat monitoring system the commission calls “a key tool to detect the movement of funds by terrorists through financial transactions or the identification of terrorist networks and affiliates” since being enacted in 2010. Under the current plan, intra-EU payments in euros are not monitored by TFTP. The EC said it will assess the need and added value of establishing a system to monitor intra-EU transactions by the end of 2016.
- In Wake of Paris Attacks, France Eyes Stricter Prepaid Rules
- Treasury: AML, CTF Efforts Have Been Effective
- Viewpoint: Balancing Digital Money, Counter-Terrorism and the Future of E-Money in Europe