Interview on the last meeting of the Working Group for Regulation which handled the topic of prevention of money laundering and financing of terrorism with Aljaz Jadek, coordinator of the Blockchain Think Tank Slovenia Group and lawyer at the Jadek&Pensa Law Office.

Aljaž Jadek, attorney at Jadek & Pensa d.o.o.
Coordinator of the Blockchain Think Tank Regulatory Working Group

Tell us more about the Working Group for Regulation and the goals you are following.

In the Blockchain Think Tank we organize meetings with various working groups where we, together with key representatives of individual areas, exchange views, share experiences and shape common positions. At this meeting of the Working Group for Regulation we addressed a very interesting topic, namely the Anti-Money Laundering and Terrorist Financing Act (ZPPDFT-1), which due to its strict rules makes operations for Slovenian blockchain companies extremely difficult. For that, we wanted to exchange views and form a common position on the changes in existing legislation, which should regulate and equate this field with European regulations.

Briefly summarize the key points you have discussed at this meeting of Working Group for Regulation.

The Directive AML 5 (also known as Directive (EU) 2019/843) was adopted on the European Union level and countries must implement it by 10 January 2020 at the latest. This Directive is the first legal Act to introduce specific European Union rules for companies that deal with cryptocurrencies. In Slovenia, similar content is already regulated in a more rigorous way by the Anti-Money Laundering and Terrorist Financing Act (ZPPDFT-1).

The meeting confirmed that the entire Slovenian blockchain community wants and seeks to implement the European Directive AML 5 in the Slovenian legal order in a way that strictly follows this Directive and does not introduce rules which are more stringent for Slovenian companies than those envisioned by the Directive. Stronger measures would put Slovenian companies seeking to be competitive in international markets in an inferior starting position. Consequently, foreign companies that would be subject to lenient measures could easily come to Slovenia, which would lead to negative consequences for our entire economy.

Explain to us the difficulties encountered by the Slovenian blockchain companies, and more precisely, those dealing with blockchain technology and crypto currencies?

Some say that cryptocurrency is subject to an increased risk of money laundering and terrorist financing due to “anonymity”. Such thinking is usually due to ignorance of business methods and transactions that are carried out with the help of the blockchain technology.

At the meeting, industry representatives confirmed the exact opposite: precisely because of the traceability of transactions, blockchain technology allows us to accurately identify the source of funds and monitor the business activities of customers. In Blockchain Technology, Anonymity is more of a myth than a reality.

One of the challenges companies face is also remote identification or verification of customer identities. How do you assess the existing provisions?

The process of identifying and authenticating a user is a common and often necessary prerequisite for the use of any service. At the same time, accurate identification and verification of data by natural and legal persons are necessary to combat money laundering or terrorist financing. Challenges for businesses occur at the moment they begin to do business in a digital way, as in this case, the process of identifying their customers takes place remotely; whereas the procedures that enable electronic identification are currently subject to stricter conditions than personal identification.

Therefore, it is important that Slovenia adopts a regulation that will allow companies to provide remote identification in a simple and secure way. Otherwise, foreign companies will enter our market; however, the risk of money laundering and terrorist financing won’t reduce. In the stricter regulation of remote identification we see only the damage to the Slovenian economy, which is already evident.

Industry representatives want more practical and accessible remote customer identification, and they also find it essential that operations using the blockchain technology (in accordance with the principle of technology neutrality) be balanced with all other operations. So: all rules that apply to normal operations should also apply to operations using the blockchain technology, without any additional difficulty in doing business.

What are your thoughts on the meeting and what are the next steps?

The response of Slovenian companies was exceptionally good, with more than 60 representatives of various companies and organizations attending the meeting. The latter is particularly important, as AML 5 does not affect only the blockchain industry, but also companies in other areas that need to identify their customers.

I can confirm that the Slovenian blockchain companies are still very interested in a regulated and predictable legal environment that enables them to further evolve. The fact that in the time of negative impressions from the market, so many companies and individuals are willing to participate in meaningful topics, is an indicator of maturity and a good starting point for the future.

Our goal remains to shape even more precise positions and start discussions with regulators and ministries. We will endeavour to assist the competent authorities in understanding the subject matter and thus facilitating the adoption of appropriate regulations. This can also prevent a situation where, due to the lack of knowledge on the topic or incorrect conclusions, strict restrictions could be accepted that would have negative consequences for companies in this field, and consequently also for the wider Slovenian economy. We hope for a positive response from the authorities — with a desire to help companies take advantage of the opportunities offered in Slovenia.


About Blockchain Alliance Europe

www.blockchainalliance.si

The Blockchain Alliance Europe Association was created with the purpose of mutual assistance in the field of business development, networking and cooperation, and a joint presence in the field of advocating the interests of members of the association. It aims to raise the awareness of the expert and lay public about the blockchain technology, and therefore organizes various events and education for this purpose. It also works with state authorities in the field of relevant legislation.

About Blockchain Think Tank Slovenia

www.blockchainthinktank.si

Blockchain Think Tank Slovenia is a non-profit company open to all stakeholders interested in blockchain technology. Think Tank acts as a single point for collecting ideas and suggestions, and at the same time it has access to relevant representatives on the side of governments, regulators and other public sector institutions, which in an open way convey ideas and suggestions from the economy, entrepreneurs, academics and individuals.

Blockchain Alliance Europe

Blockchain Alliance Europe is a non-profit organization that connects European companies and legal entities that use or implement blockchain technologies.

Blockchain Alliance Europe

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Blockchain Alliance Europe is a non-profit organization that connects European companies and legal entities that use or implement blockchain technologies.

Blockchain Alliance Europe

Blockchain Alliance Europe is a non-profit organization that connects European companies and legal entities that use or implement blockchain technologies.

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