AMLD5, the Fifth Anti-Money Laundering Directive, is a European Union law adopted in May 2018 as Directive (EU) 2018/843. It amended the Fourth Anti-Money Laundering Directive of 2015 rather than replacing it. Its best-known changes brought providers that exchange cryptocurrency for regular money, and providers of custodial crypto wallets, within EU anti-money laundering rules for the first time, and widened access to registers of company ownership. Member states had to apply it in national law by 10 January 2020.
AMLD5 is part of a series of EU directives that implement international standards set by the Financial Action Task Force. Its crypto rules were later extended by the 2023 Transfer of Funds Regulation, which applies the travel rule to crypto transfers, and by MiCA. From 2027 most of the directive's content will be replaced by a directly applicable EU AML regulation.
AMLD5 in plain terms
Anti-money laundering laws ask certain businesses, such as banks, to check who their customers are and report suspicious behaviour. Before AMLD5, crypto exchanges in Europe were mostly outside those rules, so someone could turn cash into crypto without showing ID. AMLD5 told these businesses that they too had to check customers and register with authorities.
It also tried to shine more light on who really owns companies. Criminals often hide behind layers of companies, so the directive said that the names of the real owners should be easier for the public and the authorities to find, and it tightened rules on anonymous prepaid cards.
Background
The European Commission proposed the changes in July 2016, after terrorist attacks in Paris and Brussels and the Panama Papers leak in April 2016, which revealed the widespread use of offshore companies to hide wealth. The aim was to close gaps in the Fourth Directive, especially around terrorist financing, anonymous payment products and opaque ownership structures. The directive was published in the Official Journal in June 2018 and entered into force in July 2018.
Key requirements
- Crypto firms as obliged entities. Providers of exchange services between virtual currencies and fiat currencies, and custodian wallet providers, must apply customer due diligence, monitor transactions, report suspicions and be registered.
- Definition of virtual currencies. The directive introduced an EU legal definition of virtual currencies as digital representations of value not issued or guaranteed by a central bank.
- Beneficial ownership registers. Information on the ultimate beneficial owners of companies was to be publicly accessible, with trust registers open to those with a legitimate interest, and national registers interconnected.
- Prepaid cards. The threshold for using anonymous prepaid cards was lowered to €150, and to €50 for remote online payments.
- High-risk third countries. Harmonised enhanced due diligence measures for business involving countries on the EU's high-risk list.
- Bank account registers. Central registers or retrieval systems so authorities can quickly identify holders of bank and payment accounts.
- Other sectors. Coverage of art dealers and storers for transactions of €10,000 or more, tax advisers and letting agents for high-value rents, and lists of prominent public functions for identifying a politically exposed person.
Effect on the crypto industry
AMLD5 made know your customer checks standard for fiat-to-crypto services across the EU and pushed member states to set up registration regimes. Some countries went further than required: Germany treated crypto custody as a licensed financial service from 2020, and France built on its own regime for digital asset service providers. Smaller firms that could not meet the new costs closed or moved. However, the directive left gaps. It did not clearly cover crypto-to-crypto exchanges, non-custodial wallet software or many virtual asset service providers outside its narrow categories, and national registration regimes varied widely, which encouraged firms to choose lenient jurisdictions.
Court challenge and successor rules
Public access to beneficial ownership registers proved controversial on privacy grounds. In November 2022 the Court of Justice of the European Union ruled that general public access to such information was incompatible with fundamental rights to privacy and data protection, and several member states closed public access. The EU's 2024 AML package responded with new rules giving access to those with a legitimate interest. That package includes a directly applicable Anti-Money Laundering Regulation, which applies from July 2027, a Sixth Directive covering registers and supervisors, and a new EU Anti-Money Laundering Authority, AMLA, based in Frankfurt. Crypto-asset service providers are covered in full by the regulation.
Criticism
Supporters credit AMLD5 with bringing the crypto sector into the regulatory perimeter and improving ownership transparency. Critics argue that uneven transposition, with several member states late in adopting it, undermined its aims, and that minimum harmonisation by directive left too much room for national differences, a problem the move to a regulation is meant to fix. Privacy advocates welcomed the court's limits on public registers, while transparency campaigners saw the ruling as a setback for efforts to expose shell companies.