EU’s New Anti-Money Laundering Rules to Impact Crypto Sector

EU’s New Anti-Money Laundering Rules to Impact Crypto Sector

The European Union (EU) has adopted stringent anti-money laundering regulations for crypto firms, including exchanges and asset managers. The new rules, part of the Markets in Crypto-Assets (MiCA) regulations, are set to be enforced by the end of the year and will be overseen by Frankfurt’s newly established Office of Anti-Money Laundering and Combating Financial Terrorism (AMLA). Crypto companies will have three years to implement robust Know Your Customer (KYC) and Anti-Money Laundering (AML) measures.

The new law imposes strict due diligence and identity check obligations on cryptocurrency entities, aiming to combat money laundering. The regulations also require crypto asset managers and exchanges to notify authorities of any suspicious activities potentially linked to fraud. The law, approved on April 24th, will affect crypto-asset service providers (CASPs) like centralized crypto exchanges under MiCA regulation, impacting various companies, including digital game services.

MiCA, a legal framework for the security of digital assets and their markets, is expected to be fully enforced by the end of the year. AMLA, based in Frankfurt, Germany, will oversee its implementation. Although the law has been debated in the Council, it has not yet been applied, nor has it appeared in the EU’s official journal. EU strategy and policy director at Circle, Patrick Hansen, noted that CASPs will be required to adhere to rules, including customer identity checks and AML measures. He views the new law as a positive outcome for the crypto industry, which has been under scrutiny for potential involvement in money laundering and terrorism financing.

Crypto exchanges and custodial wallet providers in the EU have previously been subject to similar requirements. Hansen highlighted the changes as favorable for the crypto business, noting that the original draft law envisioned a stricter regime. He acknowledged the contributions of associated industries, which diversified options and achieved consensus. The new laws will regulate self-hosted crypto wallets and payments, setting limits to prevent illicit financial activities.

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