The first months of term of the anticipated Law n.º 58/2020, of 31st of August , that (already late) transposed the Directive (EU) 2018/843 of the European Parliament and Council, of 30th of May 2018, promoted deep legislative changes in the Portuguese legal framework, enforced the modernization of the already outdated means of prevention of the use of the financial system for purposes of money laundering or terrorism funding and consolidated combat methods against money laundering through penal law.
The law came into force on the 1st of September of 2020 and originated changes in diplomas of the most utter importance for financial activity in Portugal, with particular focus in the Law n.º83/2017, of 18th of August, that established combat measures against money laundering and terrorism funding and the Law n.º89/2017, of 21st of August, that approved the Legal System of the Central Registry of Effective Beneficiary.
The legislative surge of the Portuguese State took on as a main course of action the need to fill the existent gap in the legal status for the prevention of money laundering, regarding the use of cryptocurrency for the purposes of laundering the proceeds of crime.
Indeed, the rising popularity of cryptocurrency as a means of exchange and investment in the financial markets, in union with the lack of regulation of a new and attractive virtual system, was allowing to dilute the proceeds of crime in both the national and European financial system, taking advantage of the anonymity granted by the digital platforms of virtual assets trading.
The Portuguese legislator went beyond of what was imposed onto him by the Directive1 by establishing as obligated, all financial and non-financial entities that carry out any activity with electronic currency, with the imposition of stricter identification and due diligence procedures2 and the obligation of prior registration of these entities.
The Banco de Portugal is now the entity responsible for registering these entities, for ensuring compliance with the applicable legal and regulatory provisions on the prevention of money laundering and terrorism funding, and for sanctioning their infringement through the application of particularly serious administrative offenses which predict fines ranging from € 50,000.00 to €1,000,000.00 for legal persons or similar entities and from € 25,000.00 to € 1,000,000.00 for individuals.3
Regarding the impact of the transposition of the directive on the Legal Framework of the Central Registry of Effective Beneficiary, the concept of effective beneficiary was broadened to include collective investment undertakings and trusts and it changed the regime applicable to the registry of the effective beneficiary RCBE, including it in the scope of updating duties and access rights, in compliance with the rules applicable to data protection.
In turn, the legal sanctioning of money laundering was subject to an expansion of the criminal type prescribed in the Penal Code through, on one hand, the explicit inclusion of new illicit facts common in underlying crimes regarding laundering, such as scam, computer fraud, terrorism, insider trading, market manipulation, among others, and, on the other hand, the broadening of the concept of advantages gained through these illicit facts.
Although around 5 months have passed since Law n.º58/2020, of 31st of August, came into force, its precise enforcement still has not allowed us to draw conclusions regarding its efficiency in the effective combat against money laundering an terrorism funding. We believe that the fast evolution of financial activities that use cryptocurrency will be this measure package's stress test, which will allow to draw the true conclusions regarding its efficiency.
1. Which defines as obligated entities only "providers of exchange services of cryptocurrency and fiat currency, and the providers of digital wallet custodial services". Refer to point 29. of Directive (EU) 2018/843 of the European Parliament and the Council of 30th of May 2018.
2. Analysis and investigation of occasionally executed transactions within the scope of its activity with virtual assets when its monetary value exceeds € 1.000,00 (one thousand euros).
3. Its required, however, to mention that Banco de Portugal does not exercise any kind of prudential or behavioral supervision over cryptocurrency issuing entities.
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