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Money laundering regime extended to bitcoin from April

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Buyers and sellers of cryptocurrencies including bitcoin will no longer be able to trade assets anonymously in Ireland under an expanded anti-money laundering regime

Cryptocurrency service providers in Ireland will have to comply with money laundering rules and other basic regulations for the first time starting next month.

The Central Bank has warned all companies that exchange or transfer virtual assets like Bitcoin, as well as those that provide financial services to cryptocurrency issuers, that they will now have to complete due diligence on their customers and account for the origin and destination of client assets in line with anti-money laundering rules that apply to other financial services providers.

The change will impose new costs on virtual asset service providers (VASPs) and remove a layer of anonymity from crypto transactions that previously might have been done without the standard checks and balances of normal financial services.

Starting in April, Vasps will have to register with the Central Bank for anti-money laundering (AML) and countering the financing of terrorism (CFT) purposes after the latest European Union AML Directive is transposed into Irish law.

Crypto firms will now have to satisfy the regulator that they have sound AML and CFT policies and that their management meet the standards for fitness and probity in the financial industry.

The change in supervisory rules will give the Central Bank the power to block senior appointments at the firms or to take enforcement action for failure to live up to AML or CFT laws.

Crypto-currency platforms have been accused of being vulnerable to criminal use and terrorist financing activities for years. The move to bring them into the wider financial regulatory framework is seen by legal and compliance sources as a necessary step in the development of a legitimate crypto-currency infrastructure for more widespread use and acceptance.

Ireland has historically been slow to adopt new EU money laundering rules, however the Government has moved quickly to bring the latest directive into law. Last July the European Court of Justice fined Ireland €2m for failing to implement previous AML/CFT measures that were meant to become law as far back as 2017.

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