UK Crypto Exchange CEX.IO Upgrades KYC Procedures

News, Regulation | December 12, 2018 By:

London-based cryptocurrency exchange CEX.IO has announced that it will require all users to disclose their identities to comply with the European Union law.

In June of this year, the European Parliament passed the EU’s Fifth Anti-Money Laundering Directive that allows authorities to monitor cryptocurrency. Under the new directive, Financial Intelligence Units (FIU) will be allowed access to information which will enable them to associate cryptocurrency addresses to the identity of the owner of the virtual currency. The goal of the new directive is to prevent risks associated with the use of cryptocurrencies for terrorist financing and to ensure increased transparency of financial transactions. EU member states have until January 10, 2020 to implement the directive in their respective national laws.

CEX.IO, which is registered as a Money Services Business within the US Financial Crimes Enforcement Network (FinCen), said that the decision to tighten the requirements was made to improve user experience with “high-level and reliable service.”

“We have always understood the importance of dealing with virtual currency within a legal framework, so mandatory verification for customers who transact in fiat currency was introduced long before the Fifth Anti-Money Laundering Directive was adopted in the EU,” said CEX Regulatory Affairs Counsel Serhii Mokhniev.

The move came after the Financial Action Task Force (FATF), an intergovernmental financial security body, published a report last week asking UK authorities to work on a plan to extend AML and counter financing of terrorism rules in the crypto sector.

“The UK acknowledges the inherent vulnerabilities associated with the anonymity of virtual currencies, and while the risk of ML/TF in this area is assessed as low, the UK acknowledges that there are intelligence gaps and VCs are being used in illicit activity (particularly in online marketplaces for the sale and purchase of illicit goods and services),” the report said.