Blockchain Project Cashaa Protecting Crypto Companies to Survive Fifth Money Laundering Directive and New FCA Rules in 2020

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Early Blockchain and Crypto project Cashaa, has launched a new “Crypto Business/Broker” account to ensure crypto businesses/brokers are compliant with the FCA’s new rules for anti-money laundering and counter-terrorist finance and the EU Fifth Money Laundering Directive (5AMLD).

“We have put our experience of dealing with hundreds of crypto businesses and extended our capabilities through technology to our customers to give them the freedom to innovate with minimum worrying about the new FCA rules or 5AMLD,” said Kumar Gaurav, CEO Cashaa.

In 2020, both the UK and the EU are enacting a number of new regulations that will impact the cryptocurrency sector, and Cashaa is adding on new compliant services for the industry.

“Our mission is to help crypto businesses get access to banking who have always struggled with traditional banks. Finally, in 2019, we started our operations in partnership with an FCA regulated entity intending to become the go-to banking services provider for underbanked industries worldwide,” stated the Cashaa team in their blog.

“We launched our business banking services in 2019, but onboarding crypto businesses was a huge challenge, mostly due to changing compliance rules, sometimes unclear KYC and AML policies of the business or sometimes just loose behaviour of founders. The Fifth Money Laundering Directive (5AMLD) became compulsory for European states from 10th Jan 2020, resulting in FCA to become the AML and CTF supervisor for crypto businesses. Based on my experience, the situation will get worse for many crypto companies out there who do not understand the implications. Our product is developed to adopt these new laws with reliable banking services to protect crypto entrepreneurs,” stated Archit Aggarwal, the CPO Cashaa.

More than 1000 crypto companies have applied to bank with Cashaa – with the bulk wanting bank accounts and credit/debit card processing. But Cashaa ended up turning away 80 percent of the applications because the businesses did not understand AML and CFT rules.

Cashaa’s “Crypto Business/Broker” account has coded policies and systems to mitigate the risk of the business being used for money laundering or terrorist financing and they have integrated the KYC system for individual and corporate entities within the account for due diligence of each sender/receiver when doing transactions.

Three levels of the KYC system will do intrusive due diligence, known as enhanced due diligence when dealing with customers who may present a higher money laundering/terrorist finance risk, also including PEP (Politically Exposed Person) checks.

They claim their systems, together with their reliable banking partners, will be doing the ongoing monitoring of all the transactions happening to make sure they are consistent with the business’ knowledge of the customer and the customer’s business and risk profile.

Staring in late January 2020, businesses were able to get a crypto broker account for Pound Sterling (GBP) and Euro (EUR). Great Britain and Lithuania IBAN (International Bank Account Number) accounts with a unique reference number will enable FPS (Faster Payments Service), CHAPS (Clearing House Automated Payment System), SEPA (Single Euro Payments Area) and SWIFT (Society for Worldwide Interbank Financial Telecommunication) payments, allowing 3rd party payments up to 200 Million GBP.

There is no monthly fee to make sure small innovative crypto companies can use the product. The KYC checks and ongoing transaction monitoring will be done automatically in the account, to make sure each transaction is following the European 5AMLD. To make sure only serious companies are applying for the account, a small application fee of 100,000 CAS will be required. Interested businesses can acquire CAS from Binance DEX.

On January 10, 2020 changes to the UK Government’s Money Laundering Regulations came into force. They update the UK’s AML regime to incorporate international standards set by the Financial Action Task Force (FATF) and to transpose the EU’s 5th Money Laundering Directive. This page highlights some specific new areas that firms need to comply with.

Vinciworks has done well to detail what the industry needs to know.

The Fifth Money Laundering Directive is now in force and has been transposed into UK law in the form of the Money Laundering and Terrorist Financing (Amendment) Regulations 2019. The new regulations amend the Fourth Directive in an effort to clamp down on terrorist financing.

What is the 5th Aml Directive (5AMLD)?

According to Digital Securities Exchange Limited (DSX) in an Op/Ed at Cryptoglobe, The 5AMLD was proposed by the European Commission in 2018 following the Panama Papers revelations and several terrorist attacks that took place in Nice and Brussels.

“These cases revealed gaps in the European AML/CTF regulation strategy, and so the new directive made important changes and adds to the previous 4AMLD, touching a larger scope of areas including virtual currencies.”

“Firstly, it is not as extensive as the Fourth Money Laundering Directive. Passed in the UK as the Money Laundering Regulations 2017, this necessitated a wholesale change in how businesses approach money laundering such as introducing the risk-based approach and removing automatic exemptions from due diligence.”

“The Fifth Directive is more of a series of amendments to the structure of the Fourth Directive, adding various additional provisions that weren’t included in the text of 4AMLD. The main changes are focused on enhanced powers for direct access to information and increased transparency around beneficial ownership information and trusts.”

5MLD will bring in changes including:

• Regulating virtual currencies and pre-paid cards to prevent terrorist financing
• Improving safeguards for financial transactions to and from high-risk countries
• Ensuring centralised national bank and payment account registers or central data retrieval systems are accessible in all member states

Key dates for 5MLD implementation

• 10 January 2020 – Beneficial ownership for corporates to be set up by
• 10 March 2020 – Beneficial ownership of trusts to be set up by
• 10 September 2020 – Centralised automated mechanisms to allow identification of those who hold or control payment accounts and bank accounts to be set up.

What does it mean for the cryptocurrency industry?

Under 5AMLD, virtual currencies such as Bitcoin will have a legal definition. Virtual currency platforms and wallet providers will also become regulated entities under the scope of the directive. While many already conduct due diligence and report suspicious transactions, the Fifth Directive will make it a legal requirement.

More from Cryptoglobe:

“As far as member states implement the requirements of 5AMLD from 10 January 2020, we can see that we’re at the threshold of wholesale global changes.”

“This process demonstrates that the European Union admits that cryptocurrencies exist and that they have a chance to become a fully legitimate and integral part of the financial system.”

“5AMLD introduces this unique regulatory framework, which is an important step in defining cryptocurrency regulation in the European Union. The legal definition of virtual currencies and other provisions of the directive, pave the way for further actions in regulating this field.”

“These regulatory efforts are a game-changer for the cryptocurrency industry, and therefore we can expect some serious market changes in 2020. After all, not every company will succeed to fulfill all the AML requirements.”

It appears that the EU is forging ahead with 5AMLD, finally admitting that cryptocurrencies are here to stay and rather than be the red-headed stepchild of the global financial industry and that they are going to finally be treated seriously. It’s on the map.