Cryptocurrencies are an innovative online payment system, which enables pseudonymous transactions, that are recorded in decentralized manner, without oversight and control of central authority. Although cryptocurrencies resemble money, they are not legal tender due to their special properties and connection of financial regulation to fiat money. Cryptocurrencies are susceptible to money laundering because of higher anonymity then in traditional payment system. Comprehensive regulation for the purpose of anti-money laundering is not possible because of lack of central authority that could be the subject of anti-money laundering regulation.
Global reach of the cryptocurrency system renders unilateral measures on national level ineffective, therefore the response of European legislator is of crucial importance in the field of anti-money laundering regulations. European Union defined virtual currency, and regulated exchanges and custodial wallet providers as obliged entities, under existing harmonisation of national legal orders of member states in the field of anti-money laundering. Due to obligation of new obliged entities to perform identification of users as a part of know your customer procedure, users who hold currencies via a custodial wallet provider or enter into virtual currency transaction via virtual exchange can no longer be anonymous, transaction performed through obliged entities will also be monitored, which together with identification reduce the risk of money laundering process.
Slovenian legislator regulated virtual currencies before the adoption of the relevant legislation on European level. Obliged entities in national law are defined wider than in the Fifth Anti-money Laundering Directive, although it remains unclear whether initial coin offerors are included under obliged entities. National legislation will have to adopt to new directive with introduction of mandatory registration of obliged entities and adjustment of verification process to online business performances.
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