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This Action Plan was released in February 2016, in the wake of the Paris terrorist attacks. It will feed a legislative proposal that the Commission will put forward in the course of the second quarter 2016, to amend the fourth Anti-Money Laundering Directive.
In this European Payments Council’s (EPC) Blog, they raise the challenges that the new legislation against terrorist financing will need to address, such as issues related to prepaid instruments and virtual currencies.
Virtual currencies are anonymous by design, with wallet addresses replacing bank account details. The number of users or miners, as well as their geographical locations, means that any regulation imposed on them will likely be ineffective. Other market actors, on the other hand, can be more easily identified and offer easier targets. Exchange platforms are a major gateway between the real and virtual economies. Ensuring that these platforms are part of the AML framework and act as gatekeepers is already a step forward in combatting full anonymity. Not all transactions, however, go through these platforms and, with a growing network of merchants and consumers who accept virtual currencies as a means of payment, they do not always need to be cashed out for traditional currencies. Virtual currency wallet providers could fill this gap as they can, after all, be seen as the bank accounts of the virtual world.
Prepaid cards are already regulated, but this did not prevent terrorists from using them in the Paris attacks to book a room or to rent a car. Are thresholds for identifying customers (currently €250) too high for general purpose, anonymous prepaid cards? Can we think of a solution that ensures that prepaid cards continue to be used and remain profitable for the industry with less or no anonymity? Can any solution avoid stifling legitimate uses of prepaid cards, such as paying social benefits to citizens, helping unbanked Europeans access financial services or allowing seasonal workers to be paid in countries where they don't have a bank account?
The answers to these questions should emerge by the second quarter of 2016 through a legislative proposal put forward by the Commission to amend the fourth AML Directive. Other short-term measures may include actions to create central registers of bank and payment accounts, strengthen cooperation between Financial Intelligence Units and set absolute limits on cash payments.