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EU Parliament Votes For Tight Crypto Regulations

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The European Parliament has passed with overwhelming majority a proposal by the European Council to introduce strict regulation for virtual currencies, like Bitcoin, to prevent them being used for money laundering and terrorism financing.

The EU Parliament had reached an agreement with the European Council in December to bring cryptocurrencies under "closer regulation." The MEPs supported the decision by 574 votes to 13 votes, with 60 abstentions.

The agreement represents the fifth and latest update to the European Union's Anti-money laundering Directive, and is part of the bloc's response to the terrorist attacks in Paris and Brussels, as well as the Panama Papers leaks.

The new measures address risks linked to prepaid cards and virtual currencies. In a bid to end the anonymity associated with virtual currencies, virtual currency exchange platforms and custodian wallet providers will, like banks, have to apply customer due diligence controls, including customer identity verification.

These platforms, including currency exchanges, cheque cashing offices, and company services providers should be registered to offer their services.

The reforms also give citizens the right to access information on the beneficial owners of firms which operate in the EU. It could help quash the corrupt use of letterbox companies created to launder money, hide wealth and avoid paying taxes - a practice which received widespread attention in the wake of the Panama Papers.

An additional measure would also open up data on beneficial owners of trusts and similar arrangements to those who can demonstrate a "legitimate interest". This would make information on trusts available to investigative journalists and NGOs. Member states will also retain the right to provide broader access to information, in accordance with their national law.

The update ensures protection for whistleblowers who report money laundering.

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