Is AML5 Cryptos Silver Bullet for it’s EU banking problem?


Over the last month or two, there have been a number of articles (exhibit one & two) claiming that AML5 will in effect mean that banks in the EU will have to provide banking services to Crypto businesses if they adhere to the AML5 requirements.

Since the 20th of January 2020 AML5 now includes the following Crypto-related businesses:

providers engaged in exchange services between virtual currencies and fiat currencies as well as custodian wallet providers. 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. Such monitoring would provide a balanced and proportional approach, safeguarding technical advances and the high degree of transparency attained in the field of alternative finance and social entrepreneurship.”

PostRaise has read the 32-page document (no it was not fun) and there doesn’t seem to be any specific mention that banks are now obliged to provide services to businesses in the Crypto space, be they exchanges and or wallet providers.

Could it be that a bank who was formally on the fence about whether or not to offer corporate banking to a Crypto exchange or wallet provider now provides this service? Yes, of course, that might be the case and its certainly the one which PostRaise is crossing its fingers and toes for.

Wishful thinking aside, PostRaise would love to run an experiment with a couple of Crypto business who were turned down by bank X in the past. The experiment would look something like this:

The Crypto exchange/ wallet provider is now fully AML5 compliant which in theory should remove a major concern from bank X (that the Crypto business, their potential client is not adequately AML/KYCing their clients). Once this is established, contacting bank X and asking them if now they are willing to offer the Crypto exchange/ wallet provider banking services that they were unwilling to provide at some point in the past.

If you are the founder of a Crypto exchange/wallet provider reach out and we can run the experiment together, it’s sure to be enlightening.

PostRaise’s best guess given the last 14 months dealing with banks on behalf of Crypto clients is… The bank will still hold that Crypto is a client type they are not interested in servicing despite the adherence to AML5.

Why might this be the case? Because there are various examples of governments/regulators implementing laws or directives that banks should be more open to XYZ business type and banks (for the most part) simply ignoring the directive as it doesn’t fit their risk appetite or it relates to a customer type which they have no interest in serving. This article seems to agree.

If a Crypto business out there wants to run the experiment or has already tried to obtain banking now that they are adhering to AML5 reach out, it would be very interesting to learn about your experience.

Final thoughts

This view is informed by the current market turmoil; the liquidity issues being faced throughout the financial system and the coronavirus added to the mix. In this climate, PostRaise doesn’t see banks magically opening their doors to what only a few months ago was very much an unloved sector of the market.

Stay safe out there!

PostRaise out...

Is AML5 Cryptos Silver Bullet for it’s EU banking problem? was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.