The fifth anti-money laundering directive was adopted on 30 May 2018. Consequently, the bill will implement the fifth directive into Danish law. The purpose of the directive is to strengthen the efforts against criminals abusing Danish enterprises and the financial system for the purpose of money laundering or terrorist financing. This is done by preventing the risks relating to the use of virtual currencies, e.g. Bitcoin and Ethereum (Ether).
According to the bill, bureaus exchanging virtual currencies and fiat currencies and providers of virtual wallets will be covered by the rules of the Anti-Money Laundering Act. It is the first time that virtual currencies are covered by the financial regulation.
Bill contains the first legal definition of virtual currencies
Bureaus exchanging virtual currencies and fiat currencies will cover market places trading in virtual currencies and fiat currencies, either where the market place acts as an intermediary between the purchaser and the seller, or where the market place is the actual provider of virtual currencies sold against purchase of fiat currencies. The bill also contains the first definition of virtual currencies within Danish and Community law:
“Virtual currencies” means: A digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency, and does not possess a legal status of currency or money, but is accepted by natural or legal persons, as a means of exchange, and which can be transferred, stored and traded electronically.”
Provided that the bill is adopted in its present form, it implies that bureaus exchanging virtual currencies and fiat currencies and providers of virtual wallets will be covered by the Anti-Money Laundering Act.
They therefore have to prepare risk assessments based on the company’s specific business model. In addition, these bureaus/providers must carry out customer due diligence procedures when establishing a customer relation or in relation to individual exchange transactions of EUR 500 or more between virtual currencies and fiat currencies. This applies whether the transaction is made once or as several transactions, which are or appear to be mutually connected.
The bureaus/providers are also obligated to have an anonymous whistle-blower scheme where their employees through a special, independent channel can report violations or potential violations of the Anti-Money Laundering Act and the rules issued thereunder. The bureaus/providers will also be covered by the rules on the duty of notification of the Public Prosecutor for Serious Economic and International Crime. The plan is that the Act will come into force on 10 January 2020.
Horten will currently follow up on the Danish parliament’s reading of the bill.