EU Broadens Anti-Money Laundering Rules to Include Crypto Firms

• EU Banking Watchdog Issues Guidance for Crypto Firms
• Increased Risks With Crypto Assets
• EU Legislation on the Transfer of Funds Via Digital Assets
• Consultation on Further Guidance
• Reporting Compliance with New Guidelines

EU Banking Watchdog Issues Guidance for Crypto Firms

The European Banking Authority (EBA), the banking watchdog of the European Union, recently provided guidance for crypto firms to adhere to its anti-money laundering and counter-terrorist financing requirements. By extending its existing measures to encompass crypto, the EBA aims to harmonize the approach that crypto asset service providers (CASP) across the EU should take to prevent financial crime.

Increased Risks With Crypto Assets

The potential risks associated with crypto asset transfers may be escalated due to their swift nature or because certain products may contain features that conceal the user's identity. Therefore, it is critical for CASPs to be aware of these risks and adopt measures to effectively neutralize them.

EU Legislation on the Transfer of Funds Via Digital Assets

In the previous year, the EU finalized legislation concerning the transfer of funds via digital assets. This legislation came as part of the groundbreaking Markets in Crypto Assets (MiCA) regulatory package. The EBA has subsequently released guidelines on risk-based supervision of CASPs and is currently discussing the proposed guidelines to prevent the misuse of crypto transfers. These guidelines align with recommendations from the global watchdog, the Financial Action Task Force (FATF).

Consultation on Further Guidance

The EBA is also in the process of consulting on additional guidance related to the internal policies and controls that CASPs should have in place. Recognizing the interdependence of the financial sector, the new guidelines even include advice directed towards other credit and financial institutions that have CASPs as customers or that are exposed to crypto assets.

Reporting Compliance with New Guidelines

Competent authorities are expected to report their compliance with the new guidelines within two months of the guidelines being translated into the official EU languages. The guidelines will be in effect from December 30, approximately when MiCA becomes fully operational.

Edited by Jonathan Stoker