In complementing the already issued directive of the EU Parliament, the Austrian Parliament in July 2019 passed into law a corresponding implementation law relating to the AML5, a decision which put the new regulation for the crypto industry effective as from 10 January, 2020. Hence, there will be inclusion of service providers in relation to virtual currencies in the legal regime to prevent money laundering and terrorist funding. The new rules have made an eye-opening experience of any unpleasant kind and it has also subjected the service providers with regard to virtual currencies to the Financial Market Laundering Act, a law that may be referred to as “Picasso of Legislation”. This new regulation also means that the banking world and the crypto industry now have similar anti-money laundering and terrorist financing rules.
The new rules apply to only service providers in relation to virtual currencies, and it has been clearly stated that digital currencies like Bitcoin, Ether, Dash, Litecoin, Monero and the likes are not virtual currencies if they are not accepted as a medium of exchange. The new regulation also defines “service provider” as someone involved in services of securing private cryptographic keys to hold, store and transfer virtual currencies on behalf of a customer. The new obligations for the crypto industry include risk analysis and in order to do this, companies are advised to critically look into their business model. The law also has a feature which states a money laundering officer has to be appointed. The new law has also empowered the FMA in its supervisory role as service providers that want to be active in Austria must as a matter of obligation register with FMA whether they are located in Austria or not.
However, the FMA can opt to reject any registration if there is doubt about the personal reliability of the service provider or its manager. Registrations once made ca also be revoked by FMA and anyone who offers services in relation to virtual currencies without registration is committing an administrative offense with a fine o 200,000 euros. This new rule has no doubt created a barrier for new companies to venture into the crypto industry, though it is a hurdle that can be overcome. The long-term effects the new law will have is yet to be ascertained and only time will tell that.