The European Council and Parliament have reached a provisional agreement to extend the scope of the European Union’s Anti-Money Laundering (AML) and Counter-Terrorist Financing regulations to encompass the cryptocurrency market. This significant development means that most entities operating within the cryptocurrency industry will now be subject to stringent AML requirements.
Under the new agreement, companies providing cryptocurrency services are mandated to verify and confirm customer identities and are obligated to report any transactions or activities that appear suspicious. Specifically, these companies must scrutinize all transactions valued at €1,000 ($1,090) or more. The legislation also introduces measures aimed at mitigating risks associated with self-hosted wallets.
The agreement places additional obligations on crypto asset service providers, especially in the context of cross-border transactions. These providers are required to conduct enhanced monitoring of business relationships involving high-net-worth individuals. Furthermore, the provisional agreement empowers Financial Intelligence Units by granting them broader access to crucial financial and administrative information. This includes details such as tax records, fund movements, frozen assets related to financial sanctions, and cryptocurrency transfers.
This provisional AML law is part of the Markets in Crypto-Assets Regulation (MiCA) package, initially proposed on July 20, 2021. MiCA is designed to regulate crypto markets across all EU member states and is a key component of the EU’s strategy to combat money laundering and terrorist financing. For this provisional law to be enacted, it must first be formally adopted by the European Parliament and ratified by each member state.
In a related development, the EU’s financial regulatory body, the European Banking Authority, which supervises banks within the EU, revised its anti-money laundering rules on January 16 to include crypto companies. Consequently, crypto firms in the EU are now required to assess their exposure to financial crimes. This involves thorough scrutiny of their customers, the products they offer, their delivery methods, and their geographical locations. This move signifies a concerted effort by EU authorities to tighten regulatory oversight in the rapidly evolving cryptocurrency sector.
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