As a result of the new European anti-money laundering guideline AMLD5 there is a great chance (the law is not final yet) that we are obligated to abide to stricter regulation for the buying and selling of bitcoins at Bitonic and BL3P starting from the 10th of January 2020. Part of the new regulations is a tightened identity check of all customers.

It can be expected that the House of Representatives of the Netherlands will decide to implement the new European anti-money laundering guideline AMLD5 into the Law on the prevention of money laundering and financing of terrorism (Wwft) in November this year.

That means that customers that buy or sell bitcoins starting from the 10th of January 2020 have to identify themselves based on identification documents. Moreover, additional questions regarding source of income, origin of money and bitcoins and the destination can be asked. Bitonic is also obligated to monitor and check the transactions of customers if they match the riskprofile during the relation.

In some other sectors the Wwft regulation only applies when it involves large amounts. For example, in the case of jewelry- or real estate trading it only applies when the values are higher than €10.000. For the trading of virtual currencies such as bitcoin the rules will also apply to smaller amounts.

At this moment the House of Representatives is discussing the precise implementation of the Wwft, so not all the details are known yet, but the expectation is that the identity verification is almost certainly included. According to the current expectations the new regulation will be enforced from the 10th of January 2020.

Far-reaching consequences on privacy

As Bitonic we have mixed feelings about the bill. We are happy that there is finally some clarity. But we also believe that the intended law is disproportional and we are very worried about the privacy of citizens. The right for privacy is always placed second by regulation due to anti-money laundering and terrorism financing and this leads to a police state. We are of course bound to the Dutch regulation and we will abide, but we are worried about the far-reaching effects on the short and long term. The new regulation and mandatory transaction monitoring applies to all customers and amounts and this will limit the financial freedom of citizens.

Privacy and Bitonic

Since the start of Bitonic in 2012 privacy has been of the highest priority. Privacy is namely synonym with safety. Due to all new KYC/AML regulations it is mandatory to ask customer information and store it. Many organizations choose to outsource the KYC/AML checks to third parties. This leads to organizations sharing all customer information, such as personal and identify documents. For this reason Bitonic has decided to develop and maintain the whole identification process internally. This way we can ensure that information of customers is not stored at third parties, but at our own systems.

A few weeks before the introduction of the new regulations we will give customers the possibility to meet the stricter identity verification to make the transition to the new situation as smooth as possible.

Read more about the coming AMLD5 regulation and consequences (Dutch).