In recent news, the European Union (EU) has formally passed a new anti-money laundering regulation (AMLR) that will have significant implications for all crypto-asset service providers (CASPs) operating within its jurisdiction. The regulation aims to enhance the powers of Financial Intelligence Units (FIUs) in order to detect and combat money laundering and terrorist financing activities within the crypto industry.
The new laws introduced by the EU will impact a wide range of crypto exchanges, brokers, and other entities regulated under the Markets in Crypto-Assets Regulation (MiCA). These laws include enhanced due diligence measures that will require obliged entities, including crypto-asset managers, to report any suspicious activities to FIUs. Additionally, CASPs will be required to perform customer due diligence on individuals conducting transactions above €1,000, even for occasional transactions outside of regular business relationships.
Establishment of AMLA
As part of the new regulations, a new body called the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) will be established in Frankfurt to oversee the implementation and enforcement of the legislation. While the Council has not yet formally adopted the law, it is expected to be published in the EU’s Official Journal in the near future.
Clarifications from Patrick Hansen
Patrick Hansen, Circle’s EU Strategy and Policy Director, took to Twitter to clarify some misconceptions surrounding the new legislation. He emphasized that the AMLR is not specifically a crypto regulation but rather a broad anti-money laundering and counter financing of terrorism framework that applies to all financial institutions, including CASPs. Hansen also highlighted that the new law does not introduce any drastic changes to existing KYC/AML procedures that CASPs are already required to follow.
Under the existing anti-money laundering framework, CASPs are mandated to adhere to standard KYC/AML procedures such as customer due diligence (CDD). This includes measures like prohibiting services to anonymous users by custodial crypto businesses and restricting CASPs from providing accounts for privacy coins. While there have been previous proposals for stricter regulations, industry efforts have led to a more risk-based approach with various options for compliance.
One notable change brought about by the new AMLR is the removal of a proposed amendment that would have limited merchant payments from self-custody wallets to €1,000. This amendment, which was initially suggested by the Parliament, was not included in the final version of the regulation. Hansen pointed out this specific change as a notable development in the legislative process.
The new anti-money laundering regulation introduced by the EU will have a significant impact on crypto-asset service providers operating within the region. While the legislation aims to enhance the detection and prevention of illicit financial activities, it also imposes additional compliance requirements on CASPs. It is essential for all entities affected by the regulation to familiarize themselves with the new requirements and ensure they are in full compliance to avoid any potential penalties or sanctions.