EU Expands Anti-Money Laundering Oversight to Include Crypto Firms

EU Expands Anti-Money Laundering Oversight to Include Crypto Firms

The European Union’s fight against financial crime has taken a significant step forward with the European Banking Authority (EBA) extending its Anti-Money Laundering and Counter-Terrorist Financing guidelines to encompass crypto asset service providers (CASPs) based in the EU. This move, effective from Dec. 30, 2023, is aimed at harmonizing financial crime mitigation efforts across the union.

The amended guidelines by the EBA are designed to assist CASPs in identifying risks associated with their operations, including factors related to their customers, the nature of their crypto products, delivery channels, and geographical locations. Additionally, the guidelines provide directives on adjusting measures to combat financial crimes, potentially involving the use of blockchain analytics tools.

The updated guidelines will now include cryptocurrency and crypto company-specific risks, offering guidance to financial firms that hold or serve crypto entities. Particular attention is given to understanding the risks tied to anonymity-enhancing features, self-hosted wallets, and decentralized platforms. These guidelines are intended to evaluate risks associated with transfers between CASPs and decentralized services.

In 2023, the EU made significant strides in regulating the crypto sector by finalizing the Transfer of Funds Regulation (ToFR) and the comprehensive Markets in Crypto-Assets (MiCA) regulations. While MiCA’s investor protections are slated to be effective from December, EU member states have the option to implement an 18-month transitional period, allowing CASPs to operate without a license during this time.

The EBA’s latest move is seen as a crucial development in the EU’s ongoing efforts to curb financial crimes within the crypto space. By harmonizing the approach for CASPs, the EBA aims to strengthen the region’s financial integrity and safeguard against money laundering and terrorism financing risks within the burgeoning crypto market.

    Newsletter | Every weekday

    Smart Central News Weekly Briefing

    Only top industry news of the week in your inbox