The Czech Republic is planning to impose a harsh set of regulations on cryptocurrency firms, exceeding the requirement specified by the European Union (EU).
The EU’s Fifth AML Directive (AMLD5) specifies the restrictions every EU country needs to follow to curb money laundering and other illegal activities using digital currencies. These rules came into force in 2018 and established a revised legal framework for the local financial regulators.
Wednesday’s report by the local newspaper Hospodářské Noviny revealed that Czech authorities are planning to impose stricter regulations including a hefty fine of up to €500,000 (almost $560,400) on crypto companies that fail to register their business with the national Trade Licensing Office.
Though the report did not specify any timeline for the introduction of the new set of the regulatory framework, EU member countries are compelled to incorporate the rules into their local laws by January 20, 2020.
Strict rules to prevent money laundering
To prevent any illegal monetary transactions using digital currencies, AMLD5 extended its purview on cryptocurrency exchanges and wallet platforms as well.
“For the purposes of anti-money laundering and countering the financing of terrorism (AML/CFT), competent authorities should be able, through obliged entities, to monitor the use of virtual currencies,” AMLD5 stated.
A threat to the crypto companies?
If imposed, the harsh regulations might impact the operation of crypto companies in the region, driving many away to the crypto-friendly regions like Gibraltar and Switzerland.
The Czech Republic is not the only EU member to overstep on the recommended regulations on crypto firms. Earlier this year, the Cyprus Securities and Exchange Commission proposed seven additional clauses to the AMLD5 recommended framework to curb money laundering.
Meanwhile, in South Korea, the Financial Services Commission (FSC) is planning to directly regulate the digital asset exchanges to prevent any illegal activities using crypto.