Cryptocurrency sector faces stricter AML regulations with EU provisional agreement
The European Union’s member states, lawmakers, and the European Commission have provisionally agreed to expand parts of the EU’s Anti-Money Laundering (AML) and Terrorist Financing law to cover the nascent cryptocurrency market.
The deal will include most of the cryptocurrency industry which means companies providing cryptocurrency services must check and confirm details about their customers. They also have to report any activities that seem suspicious. According to the new agreement, these companies must check all transactions that cost €1,000 ($1,090) or more. The temporary law also includes steps to reduce the risks linked to self-hosted wallets.
Lawmakers have set up special checks for crypto-asset service providers when they have relationships involving transactions across different countries and require them to monitor wealthy individuals' business connections closely.
The recent provisional agreement also grants special powers to the Financial Intelligence Unit (FIU). This means the agency can obtain important financial and administrative details more quickly and easily, such as tax information, funds, frozen assets connected to financial penalties, and cryptocurrency transfers.
The new provisional AML law was part of the package of legislative proposals first proposed on 20 July 2021 called Markets in Crypto-Assets (MiCA) that will govern all nations in the EU. It aims to strengthen the EU’s fight against money laundering and counter-terrorism financing. For the new provisional law to come into force, it must be first formally adopted by the European Parliament and member states.
Related: EU regulators to investigate banks’ crypto exposure
The European Union's financial watchdog is honing its rules to prevent money laundering, and this includes the world of cryptocurrencies. On Jan. 16, the European Banking Authority (EBA), which oversees banks in the EU, amended the rules about preventing money laundering to also apply to crypto companies. This means that crypto companies in the EU now have to figure out how likely they are to be involved in financial crimes by scrutinizing not just their customers, but also the products they offer, how they deliver those products, and where they are located.
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