J5 Countries Update Their Crypto Law Due to COVID-19 Pandemic

COVID-19 Pandemic Forces J5 Countries to Update Their Crypto Law

The members of the Joint Chiefs of Global Tax Enforcement (J5) are updating their crypto laws to curb financial crimes and money laundering stirred by the COVID-19 pandemic.

Cybercriminals are benefiting from the turmoil caused by the coronavirus as life moved into a digital realm, leveraging extreme fear and uncertainty to steal money and launder it through the complex cryptocurrency ecosystem. Accordingly, the joint Chiefs of Global Tax Enforcement, otherwise known as the J5, has stepped up its efforts by arresting cybercriminals suspected of laundering millions of dollars in cryptocurrency, according to a J5 joint statement. The J5 has also been updating its Anti-Money Laundering and Combatting the Financing of Terrorism laws for cryptocurrencies according to Financial Action Task Force recommendations, with Australian researchers linked half of all yearly transactions in the $250 billion Bitcoin (BTC) market to illegal activity, as indicated by a new report.

The J5 is a multiagency coalition which includes government agencies from Australia, Canada, the Netherlands, the United Kingdom and the United States. It was established in mid-2018 by the U.S. Internal Revenue Service in response to a call to action from the Organization for Economic Cooperation and Development for countries to do more to stop the enablers of cross-border tax and related crime by those individuals who have access to resources and professional enablers as well as by organized crime groups.

The J5’s first globally coordinated day of enforcement action against suspected offshore tax evasion and other related crimes was taken at the beginning of 2020. The effort involved the sharing of evidence and intelligence and information collection activities like search warrants, interviews and subpoenas.

The new Canadian crypto AML/CTF laws

Canada’s watchdog for financial crimes, the Financial Transactions and Reports Analysis Center of Canada, will start regulating crypto-related companies as of June 1.

Such companies with $10,000 Canadian dollars in crypto activities are required to register as a money service business and are also required to record the name, birth date, address, phone number and type of crypto transaction for any transaction which exceeds C$1,000. If the transaction size equals or exceeds C$10,000, more details will be required.

Rod Hsu, the chief operating officer of Interlapse Technologies Corp., said:

“Building consumer trust takes time and this space has had its fair share of negative press over the years. While regulation is adapting, by putting initial frameworks in place for businesses to operate within, this can help provide consumers with a level of comfort and security. Ultimately, consumers want to know they are protected and by having guidelines in place, businesses can be held accountable for their actions. While this is one facet of building consumer trust, it’s a vital one given the nature of Bitcoin.”

He also noted that with regulation “you will see smaller operators fall off due to the regulatory requirements and operational overhead. This will lead to consolidation of virtual currency operators that can function within these regulatory frameworks. With these requirements as a prerequisite, this will help to filter out ‘fly by night’ operators.” Hsu believes regulation is a good thing for building consumer trust and encouraging wide adoption of Bitcoin.