The Central Bank of Italy (Banca d’Italia) is that country’s very first governmental authority to release a statement on virtual currencies. It recently published 3 instructions:
- Cautions on use of virtual currencies (30 Jan 2015);
- Notification on virtual currencies (30 Jan 2015);
- Notification of Central Authority for Reporting on virtual currencies (Second Feb 2015).
The “Notice About the use of virtual currencies” (released on the Supervisory Bulletin No. 1, January 2015) is a summary of support previously issued by the European Central Bank (ECB), the European Banking Authority (EBA), and the Financial Action Task Force. The Central Bank of Italy is the first to launch any statements based on the ECB’s comments. The Notice clarifies the legal status of virtual currencies in Italy with this vital statement:
“In Italy the purchase, use and approval of virtual currency must be considered lawful activity: the celebrations are totally free to transact in quantities not revealed in legal tender.“
The January 30 Notification on virtual currencies also includes an analysis of the guidance published by the EBA, and agrees with the EBA’s suggestion that monetary institutions must stay clear of purchasing or buying virtual currencies until a formal legal structure has been established. This implies the Central Bank will not ban regulated institutions from handling Bitcoin and other virtual currencies, but recommends them to wait up until formal policies are announced.
The Notification enables financial institutions managed by the Bank of Italy to do business with any virtual currency companies, supplied that they respect existing AML/KYC requirements for account holders and warn them about the risks involved.
The Notice of Central Authority for Reporting on virtual currencies of Financial Knowledge Device (FIU) cautions that using virtual currencies might allow money laundering and terrorist financing, as previously gone over by the ECB and other European authorities. The FIU states that companies dealing in virtual currencies, consisting of holding them and exchanging them for fiat currencies, are not required to comply with any AML/KYC policies.
A reading of the documents launched by both the Central Bank of Italy and the FIU indicates that a business that negotiates in virtual currencies is not subject to any regulation at this time. However, the owners of such companies would undergo existing AML/KYC requirements when setting up a checking account or handling a controlled financial institution. Because case, virtual currency activities are not subject to any distinct regulations; instead the activities are regulated where they converge with the existing AML requirements of the Italian monetary system.
Italy is the very first nation to proclaim that virtual currency exchanges are not subject to any AML requirements. This is in contrast to the United States, where exchanges are needed to sign up with the Financial Crimes Enforcement Network (FinCEN) as Money Services Businesses.
The FIU concludes with a recommendation that controlled financial organizations examine their own clients to screen for suspicious deals. It also suggests that financial organizations enlighten their personnel about virtual currencies and the best ways to determine suspicious deals, with a particular concentrate on gaming operators.
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