EU Tightens Crypto Regulations to Combat Money Laundering and Terrorist Financing

The European Union (EU) has recently taken a significant step towards combating money laundering, terrorist financing, and other criminal activities involving crypto-assets. MEPs from the Committee on Economic and Monetary Affairs (ECON) and the Committee on Civil Liberties (LIBE) adopted new legislation as part of the EU’s anti-money laundering package. (source: European Parliament)

New Requirements for Crypto-Asset Transfers:

The newly approved legislation mandates that all transfers of crypto-assets must include information on the source and beneficiary of the asset. This information must be made available to the competent authorities. The rules will also apply to transactions from unhosted wallets and will require technological solutions to ensure individual traceability of these asset transfers.

Removing Minimum Thresholds:

MEPs decided to remove minimum thresholds and exemptions for low-value transfers, recognizing that the speed and virtual nature of crypto-asset transactions easily circumvent existing rules based on transaction thresholds.

Public Register of High-Risk Entities:

The European Banking Authority (EBA) has been assigned the responsibility of establishing a public register comprising businesses and services engaged in crypto-assets that may pose a high risk of money laundering, terrorist financing, and other criminal activities. Before distributing crypto-assets to beneficiaries, providers are required to confirm that the asset’s source is not subject to any restrictive measures and that there are no associated risks of money laundering or terrorism financing.

Closing the Loophole:

Ernest Urtasun, co-rapporteur for ECON, emphasizes that the EU’s objective is to close the loophole that enables illicit flows in crypto-assets to circulate undetected across Europe and the world. Assita Kanko, co-rapporteur for LIBE, further explains that the new legislation intends to both protect and normalize the usage of crypto-assets, while fostering trust.

The text that has been adopted serves as a draft mandate for MEPs to negotiate the legislation’s final form with EU governments. The European Parliament is scheduled to cast their vote during the plenary session in April.

The EU’s new anti-money laundering package represents a significant step in the ongoing battle against criminal activities related to crypto-assets. By enforcing stricter regulations, the EU aims to improve transparency, security, and trust within the cryptocurrency domain.