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The new money laundering prevention legislation: consequences for crypto investors

The entry into force of Royal Decree-Law 7/2021 of April 27, of transposition of directives, on April 29, 2021, represented a notable progress in a bidirectional line of regulation in the anti-money laundering directive. On the one hand, the objective is to modernize and adapt the mechanisms for preventing terrorism. On the other hand, there is the purpose of contributing to the transparency and availability of information on the real owners of legal persons and other entities that act in legal traffic.

The latest developments represent an evolution with respect to the control of the markets and to the new obligations of all those involved in the financial market. Royal Decree-Law 7/2021 modifies and completes some aspects of Law 10/2010, of April 28, on the prevention of money laundering and the financing of terrorism (LPBC).

According to Cinco Días, real ownership has been identified as a key institution in market transparency. The main modifications have been relevant. A) Yes, a new obligation is created in the LPBC (art. 4 bis), required of all legal entities created in Spain or subject to Spanish legislation, or with registered office or branch in Spain, to obtain, keep and update the information of their beneficial owners. In addition, it must be made available to the obligated subjects.

The standard refers to to the data as well as to those responsible, namely, the sole, joint or several administrator, or the board of directors and, particularly, the secretary. Nor do those structures that act as trustees of a trust or of an analogous structure, since they will be bound in the same way as commercial companies.

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As far as cryptocurrencies In this regard, the new regulations regulate the obligations of companies providing exchange services. This legislation has its origin in the so-called Fifth European Directive on Money Laundering Prevention, will force virtual currency exchange services for legal tender, or vice versa, and providers of electronic purse custody services to register and be supervised by the authorities.

Application

As Bonatti Compliance highlights, in information collected by Law and Trends, this law will apply to all those companies that are dedicated to the exchange of fiduciary currencies. That is, euros, or dollars or any other currency, for virtual currency. For this reason, any organization or citizen who wants to acquire bitcoin, in Spain or with companies that operate in our country, will have to submit to this regulation.

Similarly, the companies that will also be affected are those that provide custody services for electronic wallets in Spain. They are those who guard the cryptographic keys. Therefore, businessmen or citizens who have bitcoins in custody in these companies will be subject to this law. From this moment on, there are a series of demands that are going to be established by these companies with respect to clients and that are going to modify to a certain extent the relationship that they establish.

One of the first demands is that companies will be forced to require formal identification from customers. That is, the presentation of original collatable documentation on the identity of the natural person or the legal person who owns those bitcoins.

The only difference with the usual requirements of a bank is that in the bitcoin market it is very common for this identification to be electronic. Must be digital, standardized, compliant with European regulations, users will have to get used to the fact that through these portals they are asked for the duly collated DNI, the deeds of the company or the powers of attorney as administrator of the company that owns the bitcoins, the use of videoconferences and other remote identification systems.

Declaration of beneficial owner

Secondly, another of the requirements, aimed not so much at natural persons as at legal entities, is that a declaration of beneficial ownership is going to be requested. This means that the money laundering prevention law requires that these companies that provide cryptoactive services have a process for identifying the natural persons who are behind the legal entities as owners or as decision-makers.

Real holders are all natural persons that have more than 25% of the capital of the companies, of a legal person, such as a limited company or corporation. If they do not have it in their name, it would be those people who control the voting rights of more than 25% of the capital. They can also be the ones who make the decisions despite not being formally the owners.

On the other hand, the law includes an obligation to identify the activity of the company or natural person who owns the bitcoins. Companies providing cryptoactive services are required to have a basic information on the origin of the funds of the money with which they want to acquire the bitcoins or, in the event that they already have them and want to keep them in that organization, the keys of where those bitcoins have been obtained. Therefore, in this case, what is usually requested is, for example, the income statement, the company’s corporate taxes or a responsible statement stating the origin of the funds.

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