AMLD5 Definition

AMLD5, the Fifth Anti-Money Laundering Directive of the European Union, expands existing financial crime rules to cover virtual asset service providers. Cryptocurrency exchanges and hosted wallet platforms must now follow the same customer due diligence and transaction monitoring obligations that already apply to banks.

Core requirements for crypto businesses in the EU

• Verify customer identities through Know Your Customer procedures.
• Monitor transfers for patterns that suggest money laundering or terrorism financing.
• Report suspicious activity to the relevant financial intelligence units.

Impact on the industry

• Anonymous accounts on regulated European exchanges are disappearing because customer verification has become mandatory.
• Transparency improves as standardized reporting brings crypto activity closer to traditional finance practices.
• Global platforms that wish to serve EU users adopt AMLD5 standards, shaping compliance beyond the region.

Some privacy-centric services opted to block EU residents rather than implement the directive’s controls, whereas larger exchanges integrated the new framework and maintained market access.