It’s important to reiterate that the legal landscape for virtual asset service providers (“VASPs”) is highly dynamic, and regulatory changes are occurring rapidly.
VASPs, including crypto ATMs providers, are generally subject to existing financial regulations and anti-money laundering (“AML”) directives at both the EU and national levels.
The first EU regulation that addressed VASPs related activities, but not VASPs in particularly, was the Fourth Anti-Money Laundering Directive (“AMLD4”), which was adopted on May 20, 2015. AMLD4 did not mention cryptocurrencies, or virtual currencies at large, but provided stimulating and thought provoking discussions about it. However, in the meantime, the European Banking Authority (“EBA”) had adopted an opinion on virtual currencies in which a strong call was made to bring virtual currencies – including cryptocurrencies – under an existing legal framework. More in particular, the EBA called for virtual currencies to be included under the scope of the EU’s Anti-Money Laundering Directive
Next-in-line of the EU regulation that addressed cryptocurrencies and related activities was the Fifth Anti-Money Laundering Directive (“AMLD5”), which was adopted on May 30, 2018. AMLD5 extended the scope of anti-money laundering regulations to include virtual currencies and cryptocurrency exchanges. Virtual currency platforms and wallet providers were from AMLD5 considered “obliged entities” and are subject to Anti-Money Laundering/Counter Financing of Terrorism (“AML/CFT”) obligations, including customer due diligence and reporting suspicious transactions.
The last of the EU regulation that addressed cryptocurrencies and related activities was the Sixth Anti-Money Laundering Directive (“AMLD6”), which was adopted on July 20, 2021. AMLD6 has made requirements more onerous for obligated entities, including VASPs.
On 20 April 2023, the European Parliament adopted the Markets in Crypto Assets Regulation (“MiCA”) and the Regulation on Information accompanying transfers of funds and certain crypto-assets (“TFR”) by passing its final vote.
Law governing the prevention of money laundering and terrorist financing in Slovenia is called Prevention of Money Laundering and Terrorist Financing Act (“ZPPDFT – 2”). With the ZPPDFT-2, harmonized rules were implemented for the categories of VASPs on the base of recommendations of the Financial Groups Action project (Financial Action Task Force – FATF). Since then, VASPs are required to assess money laundering (ML) and financing terrorism (FT) (“ML/FT”) risks in its operations, and on this basis is required to put in place policies, procedures and controls for the effective mitigation of ML/FT risks, and in so doing is required to perform one of the key Anti-Money Laundering and Combating the Financing of Terrorism (“AML/CFT”) tasks, which is carrying out customer due diligence measures. Furthermore, Guidelines on the assessment of the money laundering and terrorist financing risk approved by the Governing Board of Banka Slovenije on May 5, 2022 are especially addressed to the obliged entities as defined by the ZPPDFT-2, including VASPs defined as services that a natural or legal person performs as a business or professional activity for a third party, which regarding BITNIK are the exchange of crypto-assets for fiat currency that is legal tender and the exchange of crypto-assets for other crypto-assets.
Infra-Investments d.o.o., owner of the brand BITNIK, falls under the definition of VASPs and has to be in compliance with ZPPDFT-2. Slovenia implemented regimes to regulate VASPs in the way, that applied the preventive measures on VASPs the same as any other AML/CFT obliged entity, including banks. Despite everything, in April 2023, Infra-Investments d.o.o. found itself in a stalemate when realized, that although banks and VASPs are legally obligated to follow the exact same AML/CFT regulations to ensure that they do not support money laundering activities, this is also the main reason, that banks don’t want to open a bank account to any VASPs in Slovenia.
Even though the AML/CFT rules are well defined, Infra-Investments d.o.o. is an example of struggle to maintain a bank account as VASPs in Slovenia.
And when we say struggle, we mean we’ve been declined to open a bank account from all the banks in Slovenia and consequently, because crypto ATMs require cash handling, to shut down the crypto ATM network and sell all the crypto ATMs. No matter the fact that AML/CFT regulations and the supervisory authority is identical for banks and VASPs, banks are welcomed in Slovenian financial markets, while VASPs are miles away from being welcomed. We named it a paradox.