The days of European crypto firms enjoying lawlessness are over! The EU’s banking overlords are expanding their playbook to tackle money laundering in the world of cryptocurrencies. Crypto firms based in the EU must now obey the instructions of banking supervision in the grand “battle against financial crimes.”
The European Banking Authority (EBA) declared on January 16th that the updated guidelines aim to help crypto asset service providers (CASP) identify the risk of falling victim to financial crimes due to their “clients, products, delivery channels, and geographical locations.”
Let’s refresh our memories a little: back in November 2023, the EBA threw some new industry advice into the crypto sphere, aiming to strengthen the fight against money laundering and terrorism financing (AML/CFT) in the crypto sector. The EBA proposed to merge AML/CFT criteria for both payment service providers and crypto asset service providers (CASP). Not stopping there, it also recommended that CASPs should ensure a smooth and compatible exchange of information by increasing the compatibility of their protocols.
Read More: The EU Introduces New Rules on Crypto Regulation
The European Union’s code of money laundering and terrorism financing has now been rolled out to European cryptocurrency companies, courtesy of the region’s banking regulator’s decision.
These guidelines also detail how crypto firms should tweak their anti-financial crime measures, which might involve “utilizing blockchain analysis tools,” added a keen-eyed observer. The recommendations became into action on December 30, 2023.
EBA proudly declared that these latest edits are a “mighty leap forward in the EU’s battle against financial crime” and a way to “harmonize the approach” of crypto firms across the entire union in softening the blow of money laundering and terrorism financing consequences.
What’s New in the Updated Recommendations
The refreshed guidances are adding risks and tips tailored for cryptocurrency and crypto companies, as well as recommendations for financial firms that own or service cryptocurrency firms.
The risk assessment guidance for financial crimes is now extended to crypto firms, giving them the responsibility to keep an eye on potential risks linked to “anonymity-boosting features,” offline wallets, decentralized platforms, and products that let you transfer money back and forth between the company and these hip services.
Regulatory Focus: EU’s ToFR and MiCA
Previously, in the year 2023, the Transfer of Funds Regulation (ToFR), a set of rules governing cryptocurrency transfers. They also brought us the Magnificent and Comprehensive Crypto Market Rules in Crypto Assets (MiCA).
MiCA, the protector of crypto investors, is due to come into force in December. However, EU member states can, if they fancy, introduce an optional 18-month transition period for CASPs (Crypto Asset Service Providers), giving them a license to groove without a license.
More on Regulations:
- EU Imposes Sanctions on Russian Nationals in Crypto Industry
- Bitcoin Has Gained Legality Within Honduras
The EU appears to be orchestrating a harmonious approach to mitigate the consequences of money laundering and terrorism financing across the entire crypto union. As the curtain falls on the EU’s regulatory act, it leaves us anticipating how these measures will shape the future dynamics of the European crypto landscape.
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