Crypto Providers in France Ordered to Enforce Strict KYC and AML Rules

Bruno Le Maire–the French Minister of Finance, in a press release on Dec 9, is ordering all cryptocurrency providers to enforce strict Know Your Customer (KYC) and Anti-Money Laundering (AML) rules to combat terrorist financing. 

France’s Ministry of Finance wants Providers to Ban Anonymous Crypto Accounts

For this reason, the ministry is urging providers to ban anonymous cryptocurrency wallets while also making it mandatory for foreign firms looking to expand into France to register with relevant regulators.

To fast-track enforcement, the ministry will provide new regulatory provisions.

A part of the press release read:

“This ordinance strengthens the fight against the anonymity of transactions in digital assets by including digital asset service providers (PSAN) among the entities having the ban on keeping anonymous accounts.”

Adding:

“New regulatory provisions will be presented to speed up the launch of the market for digital identity solutions for digital asset transactions. This request, which emanates from actors in the ecosystem, will make it possible to fight against anonymity transactions in digital assets while facilitating user identification.”

Cryptocurrencies in France are Largely Unregulated

Already, applicable rules in France require providers to enforce KYC and AML rules making it possible for exchanges to know the recipients of all crypto transactions.

However, cryptocurrencies remain largely unregulated. Two ordinances have so far been issued containing provisions on the application of blockchain technology. Even so, its applicability is narrow. 

Still, the government—as highlighted by the press release from the French Ministry of Finance, has embarked on a fact-finding mission and are actively working on improving its regulatory framework. 

French authorities are wary of the volatility of crypto assets and its unregulated nature. The French Financial Market Authority (Autorité des marchés financiers, AMF) and Prudential Supervisory Authority (Autorité de contrôle prudentiel et de resolution, ACPR) issued a joint statement in 2017 warning citizens against cryptocurrencies.

They specifically said Bitcoin isn’t a financial instrument under French laws and is therefore not supervised by the AMF. However, they are confident of the underlying technology, Blockchain.

In November 2020, ShapeShift said they were delisting Monero and other privacy coins to de-risk from a regulatory standpoint as BTCManager reported. Monero is the most capitalized privacy coin that the IRS looking to crack. The tax collector has already contracted two firms to develop tracing tools.